Archive for September 2008

There was a time when Canadians could secure financing in the United States as easily as they could in Canada – this time has now passed.  As a result of the subprime “crisis”, US Lenders are cracking down on foreign borrowers, and bargain shoppers are now being encouraged to bring cash with them for their purchases rather than obtaining financing.

While some consumers are still able to secure financing, the process has become extremely difficult and lenders are demanding a strenuous amount of documentation, more so than previously required.  In addition, the application times are long and strenuous, and the down payment amounts lenders are requiring have increased.

Foreign buyers, for example, should be prepared to provide detailed financial records including two years of tax returns, and down payments will likely be required to have been deposited in a US bank account for at least 30 days, and these down payments are now, more often than not, in excess of 45%.

When getting a mortgage in the Unites States, Canadians are required to deal with a “qualified lender, including a bank headquartered there or the U.S. Subsidiary of a Canadian Bank” and these lender options for Canadians are rapidly shrinking.  Lenders are tightening up due to previously lenient qualification standards and falling home values, which combined, have been perceived as the two major catalysts for the sub-prime “crisis”.

Previously lenders were providing financing for individuals with short job tenure, unstable credit, and Business-For-Self Individuals who were able to “state” their income under specific products, and as a result, mortgage defaults hit an all-time high (in the US) and lenders began to close their doors.  As a result, there has been a general crackdown on loan requirements for both foreign and domestic borrowers so caution yourself when purchasing foreign real estate. 

There are still many great deals to be had with US Investments in Real Estate, but ensure you speak to a Mortgage and Real Estate Professional before you place a deposit on a property to see what type of financing you can arrange.

MBN Mortgage

Globe and Mail

September 8, 2008

Equifax has reported a steady number of credit bureau inquiries that have been obtained without the proper authorization and they are beginning to crack down by performing random audits of credit inquiries and by asking Mortgage Specialists for copies of written consumer consent.

At MBN Mortgage it is our policy to obtain verbal and written consent from all our clients.  Whether we are taking your application over the phone or whether completing the application via our online website, you will be provided with a PIPEDA Form (Personal Information Protection and Electronic Documents Act).  This form outlines MBN Mortgage’s intended use of your credit bureau and is required to be signed by you confirming our permission to access your credit bureau for Mortgage Approval purposes

MBN Mortgage is aware of the Identity Theft and Fraud that exists, and has taken numerous measures to ensure that our client’s personal information is stored and obtained in a safe and secure manner.

When completing the online application you are asked to provide consent for us to pull your credit bureau, as well, when we are taking your application over the phone we are required to note the date and time we received your verbal consent.  In addition to these measures, we again provide you with the PIPEDA form to sign, along with a copy of your credit bureau.  By providing you a copy of your report we enable you to review your recorded credit to ensure that everything reporting is accurate.  Should there be any inconsistencies we will work with you to solve them.

Furthermore, we employ a Web Based Document Storage System that contains our client’s documents, rather than keeping hard copy files on hand.  This storage system is firewall and password protected and in the event of any physical damage, this storage system remains intact.  This form of Document Storage is advantageous over hard copy storage as no one, other than your specified Mortgage Specialist, has access to these reports.

MBN Mortgage strives to be unsurpassed in customer service and has taken the above measures to ensure our clients are not compromised in any regard.

MBN Mortgage

The Honourable Jim Flaherty, Minister of Finance, made the following statement: 

“This morning, Statistics Canada reported that real gross domestic product was up slightly in the second quarter.  As expected, the pace of economic activity remains weak as a result of the U.S. slowdown and its impact on our export sector.  For 2008 as a whole, I expect real GDP to increase by about 1 per cent”. 

He went on to say that the expected “growth in income and employment in the second quarter should help support economic activity going forward” thereby putting Canada in a better position that most other countries to withstand the economic uncertainty that we are all affected by.  “Canada’s economic fundamentals remain solid:

·         Our unemployment rate remains near a 33-year low;

·         Our budget is balanced and in fact there was a budgetary surplus of $1.7 billion in the month of June;

·         In addition, real income has increased by more than 4 per cent at an annual rate over the first half of this year. This is income available to Canadians for consumption or investment;

·         Canada’s household, business and financial sectors are strong;

·         Canada’s housing market is sound and interest rates are low; and

·         Core inflation is low and stable.

In addition, the “Actions taken by our government since 2006 will provide $21 billion in incremental tax relief—equivalent to 1.4 per cent of GDP—to Canadians and Canadian businesses this year alone, when it is needed most. This is a permanent structural tax change, unlike the temporary measures in the United States.” 

Canada is well ahead of the game and has implemented strategies to circumvent the fallout of this global financial uncertainty, “in fact, federal personal income tax refunds this year were almost $200 or 14 per cent higher than last year thanks to our tax relief measures. In addition to the stimulus provided by the reductions in personal income tax and business taxes, we have other advantages with respect to the planned business tax reductions through 2012,” which again re-confirms Canada’s financial stability.

This is not to say that we are completely unaffected as “we are facing some significant economic challenges. Canadians understand that Canada is not an island. This is a global phenomenon. The global economy overall is slowing” and “we are feeling the impact of global economic factors—including a struggling U.S. economy, and of course the U.S. is our largest trading partner.”  In saying this, “we recognize that the key to a stronger economy is creating an environment that encourages investment and spurs further job creation” which is why “we have made permanent broad-based tax reductions” and is also why we are investing in priorities: in post-secondary education, infrastructure and worker retraining” and “creating centres of excellence in science and technology.” 

Canada is being responsible and is taking the necessary courses of action by implementing long term strategies to improve competitiveness and productivity and this will ultimately have a positive impact on Canadians and the Canadian economy.

MBN Mortgage

Mortgage Intelligence Inc.

The Bank of Canada left a key interest rate unchanged on Wednesday at three per cent, even though recent economic growth has been weaker than the bank had projected.

In leaving steady the overnight rate — what big banks charge each other for overnight loans — the central bank said the state of the U.S. economy and turbulence in global financial markets have evolved roughly as it forecast.

The bank said that global inflationary pressures remain elevated, with potential implications for import prices and inflation in Canada. Overall consumer price index inflation has moved above three per cent, and core inflation has stayed at 1.5 per cent, as expected, the bank said.

The central bank forecast in July said that the country’s economy would grow at a 0.8 per cent annual pace in the second quarter, but prior to the release of the second quarter results, a deputy governor said the bank may have been too optimistic in its outlook.

On Wednesday, the Bank of Canada acknowledged that economic activity was “slightly lower than expected in July but still close to the economy’s production capacity.”

“In Canada, domestic demand has slowed modestly but remains strong. It continues to be supported by financial conditions that remain significantly better than those in most other major economies and by income gains stemming from past improvements in the terms of trade,” the bank said.

Economists said they see the central bank remaining in neutral, barring a major change in economic data.

“Going forward, it is becoming clear the [Bank Canada] would have to see either significantly weaker than expected labour and/or housing markets or renewed stresses in Canadian financial markets conditions to consider easing further,” said TD Bank economist Pascal Gauthier.

“Short of that, we look for the [bank] to stay on hold for the balance of the year,” he said.

The Canadian dollar got a boost after the rate announcement. Down before the news, the loonie rose 0.67 of a cent to close at 94.25 cents US on currency markets.

Article Taken from: Wednesday, September 3, 2008 | 4:20 PM ET, CBC News Online

The Canadian Real Estate Association Records show that the number of listings across Canada has increased since the beginning of the year, and peaked at 80,000 in July.  This has set a brand new record for the number of new listings in one month.

While sellers are maintaining their share in the marketplace there is a definite power-shift towards buyers.  Calvin Lindberg, Association President, commented saying “the more listings there are on the market, the bigger the impact on the average price”, suggesting that prices will have to decrease due to the abundance of houses on the market.

Buyers are presented with increased options and are able to scrutinize their selection and sellers will have to react accordingly; their pricing expectations are required to change, as well, they must realize that their leniency with buyer’s conditions must also shift.

Prices across Canada are having varied reactions to the current US market and Alberta is no exception.  With prices softening out west the national average is declining and as a result, the average price decreased by approximately 2.4% from last year.  The resale housing market is much more balanced this year than last but while we are currently seeing a National Average decrease, house prices in Calgary will continue to increase in the latter half of 2008, but at a more modest pace than we saw in the previous year.  The Calgary decline has been a reflection of the entire Canadian market:

five of the major markets saw price declines. In Vancouver, prices dropped 5.2% in August from a year ago to an average of $557,114. Calgary prices were down 8% during the same period to $390,091.

In Toronto, home prices are no longer keeping pace with inflation with the average price of a home up 0.8% in August from a year ago.

The statistics show activity slowing rapidly with 22 out of the 25 markets down from a year ago. Sales declines were off more than 15% in almost half the markets with Vancouver activity off 53.9% from a year ago

The abundance of Financing Options available to consumers paired with the more modest home prices, has turned the Calgary Real Estate Market into a Buyer’s Market.  Those individuals who thought they “missed the boat” by not purchasing property before the boom hit a year and a half ago, are now seeing their second chance.

MBN Mortgage

Statistics pulled from CBCNews.ca