Bank of Canada maintains overnight rate target at 1/4 per cent and reiterates conditional commitment to hold current policy rate until the end of the second quarter of 2010
OTTAWA — The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/4 per cent. The Bank Rate is unchanged at 1/2 per cent and the deposit rate is 1/4 per cent.
The ongoing global economic recovery is being driven largely by strong domestic demand growth in many emerging-market economies and supported in advanced economies by exceptional monetary and fiscal stimulus, as well as extraordinary measures taken to support financial systems.
The level of economic activity in Canada has been slightly higher than the Bank had projected in its January Monetary Policy Report (MPR). The economy grew at an annual rate of 5 per cent in the fourth quarter of 2009, spurred by vigorous domestic spending and further recovery in exports. The underlying factors supporting Canada's recovery are largely unchanged - policy stimulus, increased confidence, improved financial conditions, global growth, and higher terms of trade. At the same time, the persistent strength of the Canadian dollar and the low absolute level of U.S. demand continue to act as significant drags on economic activity in Canada.
Core inflation has been slightly firmer than projected, the result of both transitory factors and the higher level of economic activity. The outlook for inflation should continue to reflect the combined influences of stronger domestic demand, slowing wage growth, and overall excess supply.
Conditional on the current outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target.
The risks to the outlook for inflation continue to be those outlined in the January MPR. On the upside, the main risks are stronger-than-projected global and domestic demand. On the downside, the main risks are a more protracted global recovery and persistent strength of the Canadian dollar. The Bank judges that the main macroeconomic risks to the inflation projection are roughly balanced.
Information note:
The next scheduled date for announcing the overnight rate target is 20 April 2010.A full update of the Bank's outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 22 April 2010.
Showing posts with label prime rate. Show all posts
Showing posts with label prime rate. Show all posts
Tuesday, March 2, 2010
Tuesday, December 9, 2008
Bank of Canada lowers overnight rate target by 3/4 percentage point to 1 1/2 per cent
OTTAWA - The Bank of Canada today announced that it is lowering its target for the overnight rate by three-quarters of a percentage point to 1 1/2 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 1 3/4 per cent.
The outlook for the world economy has deteriorated significantly and the global recession will be broader and deeper than previously anticipated. Global financial markets remain severely strained. Measures taken by major governments are beginning to encourage credit flows, although it will take some time before conditions in financial markets normalize. In addition, a series of recently announced monetary and fiscal policy actions will also support global economic growth.
While Canada's economy evolved largely as expected during the summer and early autumn, it is now entering a recession as a result of the weakness in global economic activity. The recent declines in terms of trade, real income growth, and confidence are prompting more cautious behaviour by households and businesses.
All of these factors imply a lower profile for core inflation than had been projected at the time of the last Monetary Policy Report in October.
Several factors are helping to counterbalance the negative drag from the global economic and financial developments. The depreciation of the Canadian dollar will continue to provide an important offset to the effects of weaker global demand and lower commodity prices. As well, money markets and overall credit conditions in Canada are responding to significant and ongoing efforts to provide liquidity to the Canadian financial system.
In light of the weakening outlook for growth and inflation, the Bank of Canada lowered its policy interest rate by a total of 75 basis points in October and by an additional 75 basis points today. These monetary policy actions provide timely and significant support to the Canadian economy.
The Bank will continue to monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required to achieve the 2 per cent inflation target over the medium term.
Information note:
The Bank of Canada's next scheduled date for announcing the overnight rate target is 20 January 2009.
A full update of the Bank's outlook for the economy and inflation, including risks to the projection, will be published in the Monetary Policy Report Update on 22 January 2009.
The outlook for the world economy has deteriorated significantly and the global recession will be broader and deeper than previously anticipated. Global financial markets remain severely strained. Measures taken by major governments are beginning to encourage credit flows, although it will take some time before conditions in financial markets normalize. In addition, a series of recently announced monetary and fiscal policy actions will also support global economic growth.
While Canada's economy evolved largely as expected during the summer and early autumn, it is now entering a recession as a result of the weakness in global economic activity. The recent declines in terms of trade, real income growth, and confidence are prompting more cautious behaviour by households and businesses.
All of these factors imply a lower profile for core inflation than had been projected at the time of the last Monetary Policy Report in October.
Several factors are helping to counterbalance the negative drag from the global economic and financial developments. The depreciation of the Canadian dollar will continue to provide an important offset to the effects of weaker global demand and lower commodity prices. As well, money markets and overall credit conditions in Canada are responding to significant and ongoing efforts to provide liquidity to the Canadian financial system.
In light of the weakening outlook for growth and inflation, the Bank of Canada lowered its policy interest rate by a total of 75 basis points in October and by an additional 75 basis points today. These monetary policy actions provide timely and significant support to the Canadian economy.
The Bank will continue to monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required to achieve the 2 per cent inflation target over the medium term.
Information note:
The Bank of Canada's next scheduled date for announcing the overnight rate target is 20 January 2009.
A full update of the Bank's outlook for the economy and inflation, including risks to the projection, will be published in the Monetary Policy Report Update on 22 January 2009.
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: www.OntarioMortgageTeam.com
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: www.OntarioMortgageTeam.com
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: www.OntarioMortgageTeam.com
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: www.OntarioMortgageTeam.com
Wednesday, September 5, 2007
Bank of Canada keeps target for the overnight rate at 4 1/2 per cent
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.
Near-term prospects for economic growth outside North America appear to be slightly stronger than anticipated in the July Monetary Policy Report Update (MPRU), while near-term economic prospects for the United States are weaker than expected. It now seems likely that the adjustment in the U.S. residential housing sector will be more pronounced and protracted, exacerbated by recent developments in financial markets. On balance, this implies weaker demand for Canadian exports than had been expected at the time of the July MPRU.
In Canada, total and core CPI inflation in July, at 2.2 per cent and 2.3 per cent respectively, continued to be above the inflation target but generally in line with the Bank's expectations. The Canadian dollar has also largely traded in the range assumed in the July MPRU. At the same time, the pace of economic growth in the first half of this year was above the Bank's expectations. It now appears that the Canadian economy is operating further above its production potential than was estimated in July. Domestic demand remains robust, buoyed by a continuing strong labour market and higher-than-expected increases in home sales and prices. However, recent developments in financial markets have led to some tightening of credit conditions for Canadian borrowers, which should temper growth in domestic demand.
Against this background, the Bank judges that the current level of the target for the overnight rate is appropriate. However, there are significant upside and downside risks to the outlook for inflation. On the upside, there is a possibility that household demand in Canada could be stronger than anticipated, while on the downside the ongoing adjustment in the U.S. housing sector could be more severe and spill over to the U.S. economy more broadly. In addition, there is uncertainty about the extent and duration of the tightening of credit conditions in Canada and, hence, about the tempering effect this will have on growth in domestic demand.
The Bank will continue to closely monitor evolving economic and financial developments. A full update of the Bank's outlook for growth and inflation, including risks to the projection, 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 16 October 2007.
Near-term prospects for economic growth outside North America appear to be slightly stronger than anticipated in the July Monetary Policy Report Update (MPRU), while near-term economic prospects for the United States are weaker than expected. It now seems likely that the adjustment in the U.S. residential housing sector will be more pronounced and protracted, exacerbated by recent developments in financial markets. On balance, this implies weaker demand for Canadian exports than had been expected at the time of the July MPRU.
In Canada, total and core CPI inflation in July, at 2.2 per cent and 2.3 per cent respectively, continued to be above the inflation target but generally in line with the Bank's expectations. The Canadian dollar has also largely traded in the range assumed in the July MPRU. At the same time, the pace of economic growth in the first half of this year was above the Bank's expectations. It now appears that the Canadian economy is operating further above its production potential than was estimated in July. Domestic demand remains robust, buoyed by a continuing strong labour market and higher-than-expected increases in home sales and prices. However, recent developments in financial markets have led to some tightening of credit conditions for Canadian borrowers, which should temper growth in domestic demand.
Against this background, the Bank judges that the current level of the target for the overnight rate is appropriate. However, there are significant upside and downside risks to the outlook for inflation. On the upside, there is a possibility that household demand in Canada could be stronger than anticipated, while on the downside the ongoing adjustment in the U.S. housing sector could be more severe and spill over to the U.S. economy more broadly. In addition, there is uncertainty about the extent and duration of the tightening of credit conditions in Canada and, hence, about the tempering effect this will have on growth in domestic demand.
The Bank will continue to closely monitor evolving economic and financial developments. A full update of the Bank's outlook for growth and inflation, including risks to the projection, 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 16 October 2007.
Tuesday, July 10, 2007
Bank of Canada raises overnight rate target by 1/4 percentage point to 4 1/2 per cent
OTTAWA – The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 4 1/2 per cent. The operating band for the overnight rate is correspondingly increased, and the Bank Rate is now 4 3/4 per cent.
Economic growth and inflation in Canada in the first half of this year have been stronger than expected in the April Monetary Policy Report (MPR). Final domestic demand has remained the key driver of economic growth in Canada, bolstered by firm commodity prices. The Bank judges that the economy is now operating further above its production potential than was projected at the time of the April MPR. Both total CPI and core inflation have been higher than projected in April and are above the 2 per cent inflation target. Longer-term interest rates have increased and the Canadian dollar has appreciated sharply, moving well above the trading range assumed in the last MPR.
The Canadian economy is now projected to grow by 2.5 per cent in 2007, somewhat stronger than was expected in April, and to grow somewhat more slowly in 2008 and 2009 than previously projected. In this new projection, higher interest rates across the yield curve and a higher assumed range for the Canadian dollar of 93 to 95.5 cents U.S. act to moderate growth in 2008 and 2009 to an average of about 2 1/2 per cent. This brings aggregate demand and supply in Canada back into balance in 2009.
Inflation is projected to be slightly higher and more persistent than in the April MPR. However, as excess demand diminishes, total CPI and core inflation should decline to 2 per cent by early 2009.
There are both upside and downside risks to the Bank's inflation projection. The main upside risk is that household demand in Canada could be stronger than expected. The main downside risks are related to the higher Canadian dollar and the ongoing adjustment in the U.S. housing sector. In the context of the Bank's new projection, these risks appear to be roughly balanced.
In line with this outlook, the Bank is raising the target for the overnight rate to 4 1/2 per cent. Some modest further increase in the overnight rate may be required to bring inflation back to the target over the medium term.
An analysis of the Bank's outlook for growth and inflation, including economic and financial developments and risks to the projection, will be set out in the Monetary Policy Report Update, to be published on 12 July 2007.
Information note: The Bank of Canada's next scheduled date for announcing the overnight rate target is 5 September 2007.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
For more information on this and other money saving strategies contact:
Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage.
Purchase * Refinance * Renewal * Investment
FREE Mortgage Information and Apply On-Line at:
www.OntarioMortgageTeam.com
Economic growth and inflation in Canada in the first half of this year have been stronger than expected in the April Monetary Policy Report (MPR). Final domestic demand has remained the key driver of economic growth in Canada, bolstered by firm commodity prices. The Bank judges that the economy is now operating further above its production potential than was projected at the time of the April MPR. Both total CPI and core inflation have been higher than projected in April and are above the 2 per cent inflation target. Longer-term interest rates have increased and the Canadian dollar has appreciated sharply, moving well above the trading range assumed in the last MPR.
The Canadian economy is now projected to grow by 2.5 per cent in 2007, somewhat stronger than was expected in April, and to grow somewhat more slowly in 2008 and 2009 than previously projected. In this new projection, higher interest rates across the yield curve and a higher assumed range for the Canadian dollar of 93 to 95.5 cents U.S. act to moderate growth in 2008 and 2009 to an average of about 2 1/2 per cent. This brings aggregate demand and supply in Canada back into balance in 2009.
Inflation is projected to be slightly higher and more persistent than in the April MPR. However, as excess demand diminishes, total CPI and core inflation should decline to 2 per cent by early 2009.
There are both upside and downside risks to the Bank's inflation projection. The main upside risk is that household demand in Canada could be stronger than expected. The main downside risks are related to the higher Canadian dollar and the ongoing adjustment in the U.S. housing sector. In the context of the Bank's new projection, these risks appear to be roughly balanced.
In line with this outlook, the Bank is raising the target for the overnight rate to 4 1/2 per cent. Some modest further increase in the overnight rate may be required to bring inflation back to the target over the medium term.
An analysis of the Bank's outlook for growth and inflation, including economic and financial developments and risks to the projection, will be set out in the Monetary Policy Report Update, to be published on 12 July 2007.
Information note: The Bank of Canada's next scheduled date for announcing the overnight rate target is 5 September 2007.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
For more information on this and other money saving strategies contact:
Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage.
Purchase * Refinance * Renewal * Investment
FREE Mortgage Information and Apply On-Line at:
www.OntarioMortgageTeam.com
Tuesday, June 12, 2007
A Gentleman offers you $11,000 for your medium double double
Just imagine - as you're going through your favourite coffee drive-thru this week - that a well-dressed gentleman stops and offers you $11,000 for your medium double double. Who would hesitate? We'd take the cash. It's not so far-fetched. In fact, if you take that coffee budget and apply it to your monthly mortgage payment - a mere $30 extra per month -you could save yourself about $11,000 over the life of your mortgage.
Most of us can accept the idea that we must borrow money to purchase a home. We look for the best mortgage, and then just keep doling out the money for as long as it takes to pay it off. Most Canadians choose to amortize their mortgage over 25 years. That's a long financial commitment, and it could more than double the cost of your home. But with good planning - and a few smart tactics - you should be able to enjoy your mortgage-burning party much earlier.
Here are a few strategies for fast-tracking your mortgage:
1. Increase your monthly payments. Rather than choosing your amortization period first, ask yourself how much you can afford each month. For example, you may feel that you can afford $1,000 per month. You're delighted when your $125,000 mortgage only demands an $800/month payment (at a 6% interest). But make a monthly payment of $1,000 instead, and you'll shave 8.75 years and almost $46,000 off your total interest cost.
2. Take advantage of lower rates. In addition to reducing the overall interest component of your mortgage, you can take the opportunity to pay down more principal faster - simply by maintaining your original payment. You should even increase your payment if you can, to reap the benefits of the cheapest mortgage money in memory. Again, you could take years - and thousands of dollars -- off your mortgage.
3. Tie mortgage payments to your pay schedule. Many Canadians are paid on a bi-weekly schedule. If you accelerate your payments to bi-weekly instead of monthly, you could improve your own cash flow and fit in an extra payment each year. That means that you're paying off principal faster - leaving you with less interest to pay overall. It doesn't seem like much but - like putting your coffee budget to work - the bi-weekly strategy can have you mortgage free four years sooner, with almost $22,000 in savings.
4. Use any bonuses, tax refunds or "found money" to pay down principal. This is especially valuable in the early years of your mortgage. If you receive an annual bonus or other lump-sum compensation, see if you can put it against the principal. An extra $1,000 per year is a great way to fast-track to mortgage-free!
5. Consolidate your loans into a new mortgage and use the savings to boost your payments. If you're a homeowner with some equity, you can use your mortgage to consolidate your other loans: student loans, car loans, etc. Add the money you've been spending on loan payments to your mortgage payments, and you could see big savings in overall interest.
With mortgage rates at historic lows, you should take the opportunity to get an expert mortgage analysis from an independent mortgage broker with access to mortgages from a wide spectrum of lenders. You've got a great opportunity to put some fast-track tactics in place. You'll remember what a good decision you made at your mortgage-burning party.
For more information on this and other money saving strategies contact:
Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage.
Purchase * Refinance * Renewal * Investment
FREE Mortgage Information and Apply On-Line at:
www.OntarioMortgageTeam.com/
Most of us can accept the idea that we must borrow money to purchase a home. We look for the best mortgage, and then just keep doling out the money for as long as it takes to pay it off. Most Canadians choose to amortize their mortgage over 25 years. That's a long financial commitment, and it could more than double the cost of your home. But with good planning - and a few smart tactics - you should be able to enjoy your mortgage-burning party much earlier.
Here are a few strategies for fast-tracking your mortgage:
1. Increase your monthly payments. Rather than choosing your amortization period first, ask yourself how much you can afford each month. For example, you may feel that you can afford $1,000 per month. You're delighted when your $125,000 mortgage only demands an $800/month payment (at a 6% interest). But make a monthly payment of $1,000 instead, and you'll shave 8.75 years and almost $46,000 off your total interest cost.
2. Take advantage of lower rates. In addition to reducing the overall interest component of your mortgage, you can take the opportunity to pay down more principal faster - simply by maintaining your original payment. You should even increase your payment if you can, to reap the benefits of the cheapest mortgage money in memory. Again, you could take years - and thousands of dollars -- off your mortgage.
3. Tie mortgage payments to your pay schedule. Many Canadians are paid on a bi-weekly schedule. If you accelerate your payments to bi-weekly instead of monthly, you could improve your own cash flow and fit in an extra payment each year. That means that you're paying off principal faster - leaving you with less interest to pay overall. It doesn't seem like much but - like putting your coffee budget to work - the bi-weekly strategy can have you mortgage free four years sooner, with almost $22,000 in savings.
4. Use any bonuses, tax refunds or "found money" to pay down principal. This is especially valuable in the early years of your mortgage. If you receive an annual bonus or other lump-sum compensation, see if you can put it against the principal. An extra $1,000 per year is a great way to fast-track to mortgage-free!
5. Consolidate your loans into a new mortgage and use the savings to boost your payments. If you're a homeowner with some equity, you can use your mortgage to consolidate your other loans: student loans, car loans, etc. Add the money you've been spending on loan payments to your mortgage payments, and you could see big savings in overall interest.
With mortgage rates at historic lows, you should take the opportunity to get an expert mortgage analysis from an independent mortgage broker with access to mortgages from a wide spectrum of lenders. You've got a great opportunity to put some fast-track tactics in place. You'll remember what a good decision you made at your mortgage-burning party.
For more information on this and other money saving strategies contact:
Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage.
Purchase * Refinance * Renewal * Investment
FREE Mortgage Information and Apply On-Line at:
www.OntarioMortgageTeam.com/
Tuesday, May 29, 2007
“Subject to sale” clause requires a reality check
It’s been a ball, hasn’t it? The real estate market has been so hot for so long, we can hardly believe what houses are selling for these days. Everyone’s got a story about a friend or neighbour who got some fantastic price for a home. However there are some down sides to an up market. Among other things, buyers and sellers with stars in their eyes don’t always act rationally. We all want to believe that we can strike a big win in a hot real estate market. And sometimes we do.
But when we pin those hopes to a ‘subject to sale” clause in an Offer to Purchase, those hopes need to be accompanied by a solid reality check.
Here’s what can happen if you’re the buyer: You’ve found the home of your dreams, and while they’re asking a pretty penny for the place, you’re not really worried because your current home is also expected to sell very well. After all, the neighbours are still talking about how much the family around the corner got for their place last year! You put in a great offer on the house of your dreams, and use a “subject to sale” clause to give yourself a few months to nab a good price for your own place. Sure, you could have offered the vendor a lower price, but you can’t “go cash”, and you want to offer a price that’s attractive enough to make it worth the vendor’s while to wait for you, while you hope it all works out.
You might both be lucky: the home you’re buying might be worth what you’re offering, and your own home might be worth what you hope. And the banks might agree with your assessment of the value of both. But that’s a lot of “might”s. If you don’t get the price you want for your own home, are you prepared to honour your Offer to Purchase? Or will you need to scramble financially or plead with the vendor to negotiate a lower price? And what if the vendor is similarly counting on the offered price to purchase his or her next home? When your high hopes are disappointed, the result can be a nerve-racking and even ruinous game of financial dominoes that leaves lenders, brokers and several sets of homeowners in a cold sweat.
What if you’re the vendor? A buyer has paid you the compliment of a very attractive offer on your home – “subject to sale” of their own home, of course. Usually, an offer which contains a “subject to sale” clause requires a longer completion date so the buyer has a reasonable amount of time to capture a good price for his own home. The immediate result, then is that your home will be generally considered “off the market” during this period of time, and other buyers
will look elsewhere for a home which is clear of existing offers. Sure, you can entertain other offers, but an existing offer always puts a damper on interest – particularly if the offered price seems a little high.
The result is that your perfect buyer may not even get through your front door. And while it’s flattering to get a great offer on your home, keep in mind that you don’t have the money in your hand yet. A buyer who has unrealistic expectations about what his own house may sell for, could also have offered you an unrealistic price for yours. If he is disappointed on his own sale, you can expect to be disappointed on yours. Your buyer may either be forced to collapse the Offer to Purchase. or come back to negotiate for a lower price – after you’ve spent a few months of missed opportunities with other buyers.
These “subject to sale” clauses don’t need to be an obstacle to a smart and realistic transaction. But in a strong real estate market, optimism sometimes overcomes good sense. Before either offering or accepting a “subject to sale” clause in an Offer to Purchase, do a reality check. An independent mortgage broker can explain the consequences for both buyers and sellers, and help you chart the best course for your own financial situation.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
For more information click here for the Ontario Mortgage Team Professional nearest you:
Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage
Purchase * Refinance * Cottages * Investment
Click here for FREE Information and apply on-line
But when we pin those hopes to a ‘subject to sale” clause in an Offer to Purchase, those hopes need to be accompanied by a solid reality check.
Here’s what can happen if you’re the buyer: You’ve found the home of your dreams, and while they’re asking a pretty penny for the place, you’re not really worried because your current home is also expected to sell very well. After all, the neighbours are still talking about how much the family around the corner got for their place last year! You put in a great offer on the house of your dreams, and use a “subject to sale” clause to give yourself a few months to nab a good price for your own place. Sure, you could have offered the vendor a lower price, but you can’t “go cash”, and you want to offer a price that’s attractive enough to make it worth the vendor’s while to wait for you, while you hope it all works out.
You might both be lucky: the home you’re buying might be worth what you’re offering, and your own home might be worth what you hope. And the banks might agree with your assessment of the value of both. But that’s a lot of “might”s. If you don’t get the price you want for your own home, are you prepared to honour your Offer to Purchase? Or will you need to scramble financially or plead with the vendor to negotiate a lower price? And what if the vendor is similarly counting on the offered price to purchase his or her next home? When your high hopes are disappointed, the result can be a nerve-racking and even ruinous game of financial dominoes that leaves lenders, brokers and several sets of homeowners in a cold sweat.
What if you’re the vendor? A buyer has paid you the compliment of a very attractive offer on your home – “subject to sale” of their own home, of course. Usually, an offer which contains a “subject to sale” clause requires a longer completion date so the buyer has a reasonable amount of time to capture a good price for his own home. The immediate result, then is that your home will be generally considered “off the market” during this period of time, and other buyers
will look elsewhere for a home which is clear of existing offers. Sure, you can entertain other offers, but an existing offer always puts a damper on interest – particularly if the offered price seems a little high.
The result is that your perfect buyer may not even get through your front door. And while it’s flattering to get a great offer on your home, keep in mind that you don’t have the money in your hand yet. A buyer who has unrealistic expectations about what his own house may sell for, could also have offered you an unrealistic price for yours. If he is disappointed on his own sale, you can expect to be disappointed on yours. Your buyer may either be forced to collapse the Offer to Purchase. or come back to negotiate for a lower price – after you’ve spent a few months of missed opportunities with other buyers.
These “subject to sale” clauses don’t need to be an obstacle to a smart and realistic transaction. But in a strong real estate market, optimism sometimes overcomes good sense. Before either offering or accepting a “subject to sale” clause in an Offer to Purchase, do a reality check. An independent mortgage broker can explain the consequences for both buyers and sellers, and help you chart the best course for your own financial situation.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
For more information click here for the Ontario Mortgage Team Professional nearest you:
Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage
Purchase * Refinance * Cottages * Investment
Click here for FREE Information and apply on-line
Thursday, May 17, 2007
One in four Canadians aim to buy a recreational property
The un-official start to the cottage season is here, and as Canadians look for ways to make the most of their summer, many are looking to the country's hot recreational property market to maximize their seasonal enjoyment. And, even as prices continue to rise and more people turn to a mortgage provider to realize their vacation property dreams, consumers still want to pay down their mortgage as quickly as possible.
According to a recent poll conducted on behalf of Mortgage Intelligence Inc. and GMAC Residential Funding of Canada Limited:
> One in seven Canadians (14 per cent) currently own a vacation property and one in four (28 per cent) would like to purchase a vacation property in the future.
> Forty-one per cent of vacation property owners are over the age of 55, while 47 per cent of those who wish to purchase are between the ages of 35 and 54.
> Fifty-four per cent of Canadians would like to pay down their vacation property mortgage in 15 years or fewer. This is particularly true of retirement-age Canadians, with 83 per cent of those aged 55- plus preferring to pay down their mortgage within this time frame.
> Significant regional preferences exist for the types of recreational properties people wish to buy:
> Consumers in Quebec prefer to purchase chalets (39 per cent).
> Forty-nine per cent of people in Ontario wish to purchase a waterfront property.
Waterfront properties are also most popular in British Columbia (39 per cent), Manitoba / Saskatchewan (47 per cent) and the Atlantic Provinces (30 per cent).
People in Alberta prefer all-season properties (32 per cent).
> Most people in Alberta (69 per cent), and many in Manitoba/Saskatchewan (40 per cent), Ontario (39 per cent) and Quebec (45 per cent) plan to use 11 to 20 per cent of the purchase price as a down payment for their recreational property, while 47 per per cent of people in British Columbia and 54 per cent of people in the Atlantic Provinces plan to use more than 20 per cent.
"A growing number of Canadians are factoring a vacation property into their retirement planning and are looking for flexible mortgage solutions that will enable them to buy the property they want and retire with financial peace of mind," says Stan Falkowski, President, Mortgage Intelligence Inc. "These are hard-working Canadians who want to enjoy their retirement without making mortgage payments for years on end."
In the past, financing for a recreational property has been more challenging than for a principal residence, as traditional lending institutions have found second homes to be a less than desirable investment. But as the recreational property market continues to grow across the country, fuelled by affluent Baby Boomers preparing for their retirement years, consumers are finding they have other options that provide the flexibility and payment options that will help them pay down their mortgage faster. With a recreational property mortgage like irelax, consumers can purchase a vacation property with as little as 15 per cent down and take advantage of up to 20 per cent prepayment and up to a 20 per cent increase in payments annually.
"Vacation properties are more than just a financial investment for most Canadians. They quite often become the spot where families come together," adds Falkowski. "While recreational property mortgages are still relatively new to the market, a product like this provides an easy and affordable way to start a whole new string of family traditions."
The poll was conducted by Angus Reid Strategies between May 9 and May 10, 2007 among a representative sample of 1,046 adult Canadians. The results are accurate to within plus or minus three percentage points, 19 times out of 20.
~~~~~~~~~~~~
For more information click here for the Ontario Mortgage Team Professional nearest you:
Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage
Purchase * Refinance * Cottages * Investment
Click here for FREE Information and apply on-line
According to a recent poll conducted on behalf of Mortgage Intelligence Inc. and GMAC Residential Funding of Canada Limited:
> One in seven Canadians (14 per cent) currently own a vacation property and one in four (28 per cent) would like to purchase a vacation property in the future.
> Forty-one per cent of vacation property owners are over the age of 55, while 47 per cent of those who wish to purchase are between the ages of 35 and 54.
> Fifty-four per cent of Canadians would like to pay down their vacation property mortgage in 15 years or fewer. This is particularly true of retirement-age Canadians, with 83 per cent of those aged 55- plus preferring to pay down their mortgage within this time frame.
> Significant regional preferences exist for the types of recreational properties people wish to buy:
> Consumers in Quebec prefer to purchase chalets (39 per cent).
> Forty-nine per cent of people in Ontario wish to purchase a waterfront property.
Waterfront properties are also most popular in British Columbia (39 per cent), Manitoba / Saskatchewan (47 per cent) and the Atlantic Provinces (30 per cent).
People in Alberta prefer all-season properties (32 per cent).
> Most people in Alberta (69 per cent), and many in Manitoba/Saskatchewan (40 per cent), Ontario (39 per cent) and Quebec (45 per cent) plan to use 11 to 20 per cent of the purchase price as a down payment for their recreational property, while 47 per per cent of people in British Columbia and 54 per cent of people in the Atlantic Provinces plan to use more than 20 per cent.
"A growing number of Canadians are factoring a vacation property into their retirement planning and are looking for flexible mortgage solutions that will enable them to buy the property they want and retire with financial peace of mind," says Stan Falkowski, President, Mortgage Intelligence Inc. "These are hard-working Canadians who want to enjoy their retirement without making mortgage payments for years on end."
In the past, financing for a recreational property has been more challenging than for a principal residence, as traditional lending institutions have found second homes to be a less than desirable investment. But as the recreational property market continues to grow across the country, fuelled by affluent Baby Boomers preparing for their retirement years, consumers are finding they have other options that provide the flexibility and payment options that will help them pay down their mortgage faster. With a recreational property mortgage like irelax, consumers can purchase a vacation property with as little as 15 per cent down and take advantage of up to 20 per cent prepayment and up to a 20 per cent increase in payments annually.
"Vacation properties are more than just a financial investment for most Canadians. They quite often become the spot where families come together," adds Falkowski. "While recreational property mortgages are still relatively new to the market, a product like this provides an easy and affordable way to start a whole new string of family traditions."
The poll was conducted by Angus Reid Strategies between May 9 and May 10, 2007 among a representative sample of 1,046 adult Canadians. The results are accurate to within plus or minus three percentage points, 19 times out of 20.
~~~~~~~~~~~~
For more information click here for the Ontario Mortgage Team Professional nearest you:
Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage
Purchase * Refinance * Cottages * Investment
Click here for FREE Information and apply on-line
Thursday, May 3, 2007
Stability in the money market
Here is some historical data on Canadian Prime Rate I thought you'd find interesting.
If the Prime Rate remains the same for the next two weeks, it will have been 6.00% for a full year. The last change was May 17th, 2006.
The Prime Rate has not been that stable (over a 12 month period) for 34 years, not since April 1973.
Other periods of note where the Prime Rate has been stable for periods of up to 11 months.
1983 - 1984 Rate - 11.0%
1989 - 1990 Rate - 13.5%
1996 - 1997 Rate - 4.75%
2004 - 2005 Rate - 4.25%
The record, which is in very little threat of ever being broken, is 4.50% from November 1944 to March 1956. That's 11 year and 5 months following the war.
For more information contact the Ontario Mortgage Team Professional nearest you
Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage.
Purchase * Refinance * Renewal * Investment
FREE Mortgage Information and apply on-line at:
http://www.OntarioMortgageTeam.com
If the Prime Rate remains the same for the next two weeks, it will have been 6.00% for a full year. The last change was May 17th, 2006.
The Prime Rate has not been that stable (over a 12 month period) for 34 years, not since April 1973.
Other periods of note where the Prime Rate has been stable for periods of up to 11 months.
1983 - 1984 Rate - 11.0%
1989 - 1990 Rate - 13.5%
1996 - 1997 Rate - 4.75%
2004 - 2005 Rate - 4.25%
The record, which is in very little threat of ever being broken, is 4.50% from November 1944 to March 1956. That's 11 year and 5 months following the war.
For more information contact the Ontario Mortgage Team Professional nearest you
Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage.
Purchase * Refinance * Renewal * Investment
FREE Mortgage Information and apply on-line at:
http://www.OntarioMortgageTeam.com
Subscribe to:
Posts (Atom)
