Archive for November 2008

During the past 15 years, residential mortgage credit has expanded at an average rate of 7.2% per year, which is slightly faster than the 6.9% growth rate for total household and business credit.

With this, more and more Canadians are utilizing the resources of a Mortgage Broker/Specialist when shopping for financing.  Forty percent consulted a Broker last year, up from the 28% the year before, and, 35 percent of new mortgage were taken out through Mortgage Brokers.

Why are borrowers increasingly reaching out to Brokers? 

If you are new to the world of real estate investing or purchasing, it can seem very intimidating.  We all know a thing or two about purchasing real estate from watching tv and reading newspapers and books.  However, the best advice we can offer is to surround yourself with an expert network of advisors.  With the vast quantity of lenders and products available to home-buyers it can often times become overwhelming and confusing.  Why should you have to sort through hundreds of lenders and products to try and determine what type of financing is best suited for you and your needs?  Why not leave it to the experts…

At MBN, our Calgary and Southern Alberta Mortgage Specialists are well versed in the world of mortgages and financing.  With over 25 years in mortgage and real estate experience we have researched all the lenders and products available to you and are able to determine a financing solution best suited to your immediate and long term needs.

When we sit down with you we will not only discuss your immediate financing requirements for your upcoming purchase or refinance but will also discuss with you your long terms goals.  Your long term goals are often neglected when arranging your financing, but are imperative when planning your future and using your home as an investment tool for your retirement.

Contact your Calgary and Southern Alberta MBN Mortgage Specialist at 1.866.955.9662 or by visiting us at www.mbnmortgage.com

Copper tumbled more than 5% on Monday and aluminum sank to a three-year low on a weaker consumption outlook for metals in the face of a global downturn.  European Shares dived with miners among the 10 biggest losers on Britain’s share index.  The price of copper – often seen as a key gauge of real economic activity – more than halved and closed at $3,660, down $160, or 5.8 per cent since Friday’s close.

The National Association of Business Economists’ poll of 50 professional forecasters released on Monday found that real gross domestic product in the United States was expected to fall 2.6 per cent in the fourth quarter and slump 1.3 per cent in the first three months of 2009.

The picture was no different in Europe. The Confederation of British Industry forecast that Britain will suffer its sharpest economic contraction in almost two decades next year, and unemployment could rise to almost three million by 2010.

Are you waiting to see if your Metal Market Stocks will sky-rocket back up?  The latest economic forecast shows that may be a long wait.

What should you do in the interim?  Why not transfer your investments to a safer, more secure opportunity with the MBN (7-1) Bond Fund that offers a fixed 7% rate of return, compounded annually.  Void of fees and commissions, your investment grows and provides you with the peace of mind that your retirement is being well taken care of.

Contact your MBN Bond Fund Specialist today at www.mbnbondfund.com to see how transferring your investments to the MBN Bond Fund (with its 7% fixed rate of return) can be the difference between surviving your retirement or thriving in your retirement.

Act now…Your Retirement Is Too Important To Leave To Chance…The MBN Bond Fund

MBN Mortgage

November 17, 2008

Globeandmail.com

The obvious difference between an Interest Only Loan and a Principal and Interest Loan is that with Interest Only you are not paying down the principal balance of your mortgage.  This means you could possibly owe exactly the same amount after your term ends as when you started.

If this is the case, why would you want an Interest Only Loan?  For many home owners it provides the flexibility they want when searching for a mortgage; for others it enables them to purchase more house for a lower monthly payment, and, for investors it may enable them to purchase rental properties and maximize their cash flow.  Whatever the reason, interest only loans provide an appealing alternative to home buyers.

 How would your monthly payment differ with an interest only mortgage versus a principal and interest mortgage?  See below.

Principal and Interest Home Loan using a $100,000.00 mortgage:

Mortgage Payment = P [ i(1 + i)ⁿ ] / [ (1 + i)ⁿ - 1]  where Interest (i) equals r/12.

For our $100,000 mortgage at 5% compounded monthly for 15 years, we would first solve for i as: i = 0.05 / 12 = 0.004167 and n as 12 x 15 = 180 monthly payments

Next we would solve for (1 + i)ⁿ = (1.004167)¹⁸⁰ which yields 2.11383. Now our formula reads Mortgage Payment = P [ i(2.11383)] / [ 2.11383- 1] which simplifies to Mortgage Payment= P [.004167 x 2.11383] / 1.11383 or:  Mortgage Payment = $100,000.00 X 0.00791 = $791.81

Versus Interest Only Mortgage:

Mortgage Payment = (Mortgage Amount X Interest Rate) / 12 months which equates to:

Mortgage Payment = (100,000.00 X 5.00%)/12 = $416.67

*It is obvious that an Interest Only Mortgage offers a drastically decreased payment amount on a monthly basis, which may be a great feature for some home buyers.  It is important to take into consideration all factors when determining your mortgage requirements.

When choosing the type of mortgage you want, speak with your Mortgage Specialist and discuss what the most important factors in a mortgage are for you.  Is it monthly payment amount, the lowest interest rate, the ability to pay off your mortgage without a penalty? 

The terms of your mortgage should be chosen based on your unique mortgage needs and we can help you with this.  For further information contact your MBN Calgary and Southern Alberta Mortgage Specialists at 1-866-955-9662.

MBN Mortgage

*may vary

The U.S. government and the country’s mortgage sector on Tuesday announced plans to help homeowners behind on their house loans.

Roughly four million U.S. homeowners were behind on their mortgage payments or in foreclosure in June, according to data from the Mortgage Bankers Association. 

To qualify, homeowners will have to be at least three months behind on their payments, and owe more than 90 per cent of the value of their house.  Anyone who does not occupy their home would not qualify for the aid, nor would borrowers who have gone into bankruptcy.

The government’s plan would see interest rates cut so that borrowers would wind up not spending more than 38 per cent of their income on house payments. Another option is for loans to be extended from 30 years to 40 years, or for some of the loan principal to be deferred.

“Foreclosures hurt families, their neighbours, whole communities and the overall housing market,” said James Lockhart, director of the U.S. Federal Housing Finance Agency. “We need to stop this downward spiral.”

Lockhart’s agency seized control of two mortgage finance companies, Fannie Mae and Freddie Mac, in September. Together, Fannie Mae and Freddie Mac own or guarantee almost 31 million U.S. mortgages, or about 60 per cent of all outstanding mortgages.  The new plan is hoped to be in place by Dec. 15.

So How does the US Mortgage Market compare with the Canadian Market?

Despite this past month’s financial sector turbulence and the heightened concerns over the US economy, Harper said the Canadian Financial Institution remains in “very good shape.”  All information provided to Harper’s government has indicated that while there are banks that have had significant write-downs, none near the extremity of AIG, the balance sheets of the financial sector remain strong.

Harper is further supporting Economists’ suggestions that the troubles in the US should not “spill over into Canada.” Canada has strong economic fundamentals and a government that has been prudent and pro-active.  The Canadian government anticipated the US bubble would burst over a year ago and the crisis this week was not surprising, nor unexpected.  It is however, not expected to affect Canada to anywhere near the extent it has affected the US. 

There is no direct tie between the US housing market and the Canadian housing market and Canada’s strong economy and dearth of high-risk mortgage lending should help the real estate sector withstand the volatility that has been buffering the equity markets.   Ultimately, the Canadian market should be relatively unscathed by the turbulence experienced in the US.

MBN Mortgage

CBCNews.ca

November 11, 2008

Math whiz Ravi Sood has ridden the highs and lows of the wild world of hedge funds.

The president of Lawrence Asset Management Inc. made a name for himself running the firm’s flagship hedge fund with stellar returns such as his 75-per-cent gain in 2007.  But the stock market crash has dealt a blow to Lawrence Partners Fund, which suspended redemptions this week after plunging 65 per cent for the first 10 months of this year.

The investment firm “believes it is in the best interests of all shareholders to suspend redemptions for 60 days,” the 32-year-old manager told investors in letter on Monday. “We are reviewing the situation and expect in the upcoming weeks to present to LPF shareholders a number of alternatives.”

Mr. Sood is the latest victim among Canadian hedge funds caught in the market turmoil.  Falling stock markets are forcing many hedge funds to wind down or undergo a makeover.  “Certainly we are going to see more hedge funds suspend redemptions to meet an orderly request of unitholders who want their money,” said fund analyst Peter Loach. “A lot of hedge funds focus on small-cap stocks, and they have been hit the hardest.”

Last month, Toronto-based Epic Capital Management Inc. said it was closing its flagship Epic Limited Partnership hedge fund after assets sank to $200-million from $300-million.

Lawrence Partners Fund’s options could include winding down. They could also include cutting the management fee for investors willing to stay, sources say, or allowing some investors to pull out if they agree to a further loss on their investment in return.

The past two months have been challenging for Mr. Sood, a precocious student who completed high school at age 16. He joined Toronto-based Lawrence & Co. after graduating with a math degree from the University of Waterloo.

This is the firm founded by legendary Bay Street bond trader Jack Lawrence who built the former Burns Fry into a powerful investment dealer. It boasts blue-chip names such as John Crow, former governor of the Bank of Canada, and Paul Volcker, former chairman of the U.S. Federal Reserve Board, on its advisory board.  With his partners at Lawrence & Co., Mr. Sood founded Lawrence Asset Management as a subsidiary in 2001.

His hedge fund, which invests in smaller-capitalization Canadian stocks and has private equity holdings, saw its stellar track record unravel in September when it took a 48-per-cent haircut. The fund, which had about $217-million in assets in late March, lost more money last month.

Mr. Sood could not be reached for comment, but he told investors in his letter that the fund’s poor performance was also affected by the credit crisis. He “was forced to adjust on little notice to more restrictive credit terms in an already problematic market.”

Sources close to Lawrence Partners say the fund’s prime brokers at BMO Nesbitt Burns and CIBC World Markets cut back on their loans, and that forced the fund to sell holdings in takeover targets Fording Canadian Coal Trust and BCE Inc. at a loss.

The fund was also “negatively impacted” by the delay in closing and lowered pricing in the acquisition of PBS Coals – a major holding – by OAO Severstal, Mr. Sood wrote.

So with Hedge Funds drastically plummeting, where should you turn for safer, more secure investments?

The MBN (7-1) Bond Fund offers the security you are looking for, with the return you want.  It is an RSP eligible bond that provides a 7.0% annual fixed rate of return compounding over a 4 year period, which provides an annualized rate of return of 7.7%.  This fund, unlike most other funds, is Hard Asset Backed, meaning it is secured to real estate which is a tangible asset.  Hard Asset value offers an objective measure of value, based largely on supply and demand economics (market forces) and the law of substitution.  All of these factors, when combined, make for an extremely secure investment and create the asset backed investment, rather than stock backed investment, that most Canadian Financial Institutions are comfortable lending on.  Ask yourself this: What do most of the Major Banks lend on: Real Estate or Stocks?   The answer is Hard Asset Backed Mortgages, or Real Estate.

With the MBN Bond Fund the principal is backed by real estate and the interest is covered by a performance bond.  This gives you peace of mind with regards to the security of your investment.

By transferring your registered investments to the MBN Bond Fund there are no tax implications to be had as you are moving your investments from one Registered Fund to another; you are not relying on consumer confidence to increase the value of your stocks; and you are removing the market volatility that has caused the decrease in your investments.

By doing your research and being a knowledgeable investor you can protect your investments; your lifestyle, your children’s college funds, and your retirement income.  Your investments are too important to leave to chance.  Contact your MBN Bond Fund Specialist at 1-877-212-8002 or www.mbnbondfund.com to learn about how you can transfer your Registered Investments and begin earning a fixed 7% rate of return.

In addition to the Bond Fund, MBN offers a financing team with Mortgage Associates specialized in first-time home buyer financing and investment property financing. 

To learn more about your mortgage options please contact your Calgary and Southern Alberta Mortgage Specialists at MBN Mortgage at 1-866-955-9662 or http://www.mbnmortgage.com

MBN Mortgage

Globe And Mail

Nov 11, 2008