Archive for the ‘Financial News’ Category
January 27th, 2012 | 
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First-time homebuyers have traditionally been an important segment of the market for mortgage brokers and a new product from Mortgage Alliance aims to strengthen that relationship.
My First Mortgage, which offers customers a competitive rate also includes: all the legal costs and title insurance. But there’s more. The first-time buyer also receives home insurance coverage for six months and six month’s of creditor life insurance coverage.
The announcement was just one of many made in Toronto on Thursday at Mortgage Alliance’s annual Kick-Off Rally. The event brought together more than 500 members, while others in Calgary and Vancouver watched the action on live streaming video. The event also featured a trade show exhibit in all three locations featuring MAC’s lenders and ancillary strategic partners.
Mortgage Alliance president and CEO Michael Beckette called My First Mortgage “an attractive product that’s been bundled with the essential service and insurance products in an all-one-one mortgage.
“We wanted to focus a product that will help grow our broker’s business amongst our most important consumer group AND that will appeal to our broker’s realtor partners,” said Beckette.
The new product offered exclusively through Mortgage Alliance brokers and agents will be immediately available to all Ontario residents with plans to roll out the brand nationally over the next few months.
Another major announcement made at the show was the unveiling of a new Mortgage Alliance web-only commercial to be aired on the company’s website in late February at the same time a new national radio campaign will be launched featuring the company’s $100,000 “Minimize Your Mortgage Sweepstakes Promotion,” now in its fifth year.
The ad features a fictional “Director of Apology” spokesperson that apologizes to the viewers for the injuries that keep happening to customers celebrating after they’ve received the good news from their Mortgage Alliance professional.
Louie Bettio, Brand Champion of Mortgage Alliance told MortgageBrokerNews.ca that the on-line commercial was created for two reasons. “Recent research conducted by Microsoft and Neilson’s media measurement demonstrated that consumer’s ‘likeability’ towards a company – especially in the financial services industry – is significantly increased when they see an original on-line video ad versus a repurposed TV commercial.
“Also, we wanted to take an otherwise stressful situation for a consumer and add some levity into the process, affecting favorability towards the brand and moving the consumer from consideration to conquest – in order to further grow our broker’s business.”
Still not done, MAC announced the launch of a new integrated and automated consumer correspondence program. The system called “IMPACT” will be a strategic advantage for brokers to stay in-touch and top-of-mind with consumers for both retention and referral building opportunities, according to Beckette.
“As we’ve learned and seen through the recent Maritz broker research, 67 per cent of brokers don’t contact their client post-deal,” he said. “Over the past seven years we have aggressively focused on helping out brokers build stronger broker-client relationships. Systems like MortgageBOSS help our brokers generate better ‘prospect-to-customer and customer-to-repeat customer conversion.’”
In a philanthropic note, Beckette, who was recently named Honourary Chair, announced that Mortgage Alliance has pledged to raise more than $200,000 towards The Weekend to End All Woman’s Cancer Charity in 2012.
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The Canadian housing market will continue along its growth trajectory in 2012 despite concerns over the European debt crisis and its impact on the global economy, according to a report released today by RE/MAX.
The Canadian housing market will continue along its growth trajectory in 2012 despite concerns over the European debt crisis and its impact on the global economy, according to a report released today by RE/MAX.
By year-end 2011, an estimated 460,000 homes are expected to change hands, up 3% from the 447,010 units reported in 2010. Sales are expected to climb one per cent to 464,500 units in 2012. The value of a Canadian home is set to climb to $363,000 this year-an increase of 7% over the $339,030 posted one year ago.
By year-end 2012, the average price in Canada is forecast to appreciate 2% to $371,000.
“The Canadian housing market has demonstrated tremendous resilience in recent years, but 2011 stands out,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “Instead of responding to economic concerns both here and abroad with a retreat in sales and prices, residential real estate markets actually experienced an upswing in the volatile third and final quarters. While clearly not impervious to the impact, Canadian consumers are intent on making their moves now, in advance of higher housing values and rising interest rates down the road.”
Improvement in both provincial and local economies, especially during the second half of 2012, should serve to further stimulate homebuying activity. Calgary, Saskatoon, and Halifax-Dartmouth will likely lead the country in unit sales in 2012, each with a projected increase of five per cent. Regina, Greater Toronto, Saint John, Moncton, and St. John’s anticipate a three per cent increase in home sales next year.
“The economic underpinnings support ongoing demand, particularly as job creation efforts continue and unemployment rates edge down further,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada.
“Nationally, we remain on an upward track, and the confidence consumers have demonstrated in housing over the past decade will prove well founded once again next year. The rising belief in homeownership is key, especially among Generation X and Y-some of whom are making their moves sooner. Boomersa nd retirees are changing, too. They’re healthier and more active, with longer life expectancy. Overall, we’re seeing an extension of the homeownership cycle, and it’s great news for housing.”
Still, it was tighter supply levels that contributed to steady price appreciation in most major markets across Canada this year, an increase in inventory more in line with years previous should ease upward pressure on average price in the year ahead.
The highest appreciation is expected in Regina, where values are forecast to increase eight per cent, followed by Greater Toronto, Halifax-Dartmouth, and St, John’s-each posting a 5% gain.
The Bank of Canada kept its overnight interest rate at 1% on Tuesday, predicting that Europe’s recession would be “more pronounced” than previously thought but giving no suggestion of an impending rate cut.
“Conditions in global financial markets have deteriorated as the sovereign debt crisis in Europe has deepened,” the central bank said in announcing it was keeping its key interest rate on hold for the “medium term.”
“Additional measures will be required to contain the European crisis. The recession in Europe in now expected to be more pronounced than the bank anticipated in October.”
Last month, Bank of Canada governor Carney told a Montreal business audience that the central bank sets monetary policy “in the real world, where shocks are a fact of life.”
Those shocks have continued as European leaders struggle to tame the region’s debt crisis, which began in smaller economies – such as Greece, Spain and Ireland – and now threatens to spread to stalwarts Germany and France, unthinkable only a few months ago.
On Monday, the leaders of Germany and France agreed to a plan to tighten fiscal policy among the 17 nations that share the euro currency. Those proposals will be presented to the European Union at a summit Friday in Brussels.
On the same day, however, rating agency Standard & Poor’s threatened to downgrade domestic ratings across most of the eurozone.
That was met with a blunt response from German Economy Minister Philipp Roesler, who said his country “will not be influenced by . . . the short-lived verdict of one rating agency.”
Meanwhile in Canada, gross domestic product grew by 0.9% between July and September, or 3.5% on annualize rate. The third-quarter jump followed a 0.5% contraction in the second quarter.
The central bank says growth in the second half of 2011 “is slightly stronger than the bank projected in October.”
“Household expenditures have more momentum than had been expected and business investment remains solid.”
While third-quarter GDP was better than expected, Canada’s employment picture remains cloudy. The country lost 18,600 jobs in November and the unemployment rate edged up to 7.4% from 7.3%.
The Bank of Canada’s key interest rate has been at 1% since September 2010, with policy-makers attempting to avoid another recession by encouraging spending by businesses and consumers.
“With the target interest rate near historic lows and the financial system functioning well, there is considerable monetary stimulus in Canada,” the bank said in its Tuesday statement.
Canada’s annual rate of inflation eased to 2.9% in October from 3.2% the previous month. Still, that marked the 11th straight month that the overall consumer price index was above 2%, the Bank of Canada’s target within a range of one to 3%.
The core inflation rate, which factors out volatile items including some food and energy products, now stands at 2.1%, down from 2.2% in September.
“Although total CPI inflation has been slightly higher than projected, the bank continues to expect the inflation rate to decline as a result of reduced pressures from food and energy prices and ongoing excess supply in the economy,” the Bank of Canada said Tuesday.
However, the bank said it would “continue to monitor carefully economic and financial developments in the Canadian and global economies, together with the evolution of risks, and set monetary policy consistent with achieving the 2% inflation target over the medium term.”
The Bank of Canada’s next interest rate decision will be announced Jan. 17, followed the next day by an updated outlook for the economy and inflation.
http://business.financialpost.com/2011/12/06/bank-of-canada-holds-rates/
Variable-rate mortgages are so over.
Go fixed rate if you’re arranging or renewing a mortgage, and think hard about the four-year term. If you take in all the recent developments in the mortgage market, this is the most logical strategy.
Variable-rate mortgages are being sold at the prime rate in many cases right now, which is 3 per cent. The traditional discount off prime? Snuffed out by the banks. They’ve decided they aren’t making enough money from discounted variable-rate mortgages, so goodbye discount for the most part. If you shop around, maybe you’ll get 0.2 of a point off prime.
Now for the fixed-rate alternative. Global economic uncertainty and sluggish growth mean you’ll pay in the area of 3 per cent for a four-year term. This explains why veteran mortgage broker Peter Majthenyi has pretty much given up on variable-rate mortgages.
“For 10 years, I’ve said don’t waste your money on a fixed-rate mortgage,” Mr. Majthenyi said. “Today, I just cannot in good conscience put a borrower into a 3-per-cent variable when for the same rate I can put them in a four-year fixed.”
Mr. Majthenyi calls this a “temporary break” from variable-rate mortgages. He’ll see what happens when today’s four-year terms expire. Meantime, he’s gone from writing about 98-per- cent variable-rate mortgages a year ago to virtually zero now.
Numbers from the Canadian Association of Accredited Mortgage Professionals (mortgage brokers, to put it in English) show that variable-rate mortgages had about one-third of the market as of this past spring, compared to 21 per cent four years ago. Interest in variable-rate mortgages was as strong as ever going into the summer as a result of an uncertain global economic outlook that was expected to keep interest rates low. Variable-rate mortgages could be had back then for 2.25 per cent, which represented a discount off prime of 0.75 of a point. Four- and five-year fixed-rate mortgages would have cost roughly 3 to 3.5 per cent, and that included a strong discount.
This was an ideal environment for variable-rate mortgages. The prime rate, used by lenders as a reference for many of their loans, was low and expected to stay that way for as long as it took for the global economic mess to resolve itself. The prognosis was for continued savings versus a fixed-rate mortgage.
Then came two developments that led to Mr. Majthenyi’s 180-degree turn against variable-rate mortgages. One, the cost of fixed-rate mortgages fell a little as a result of the stock market uproar in August and September. Here’s how that worked: Money flowed out of stocks and into bonds, which set the trend for mortgage rates. When a bond’s price rises, its yield falls. And so, as bond yields moved lower in the late summer, so did rates on fixed-term mortgages.
The second development was a decision by the big banks to clamp down on discounts given to customers going variable. “Bottom line, the banks have been stuck with too many variable-rate mortgages that are not profitable,” Mr. Majthenyi said. “How do they make them more profitable? They have to increase their profit on each mortgage.”
A few mortgage brokerage firms now advertise variable-rate mortgages at 2.8 per cent, or prime minus 0.2 of a point. But Mr. Majthenyi said many of the big lenders he deals with as a broker are now at prime. Looking ahead, he sees the market settling into prime plus or minus 0.2 for variable-rate mortgages.
You may still be able to save a token amount with a variable-rate mortgage over a fixed-rate mortgage with a term of four or five years. But it’s not hard to imagine the advantage of the variable rate disappearing in a year or so as the economy rallies. Then, you could be looking at a long period of rising rates.
So get over any ideas you have about variable-rate mortgages being cheap enough in the here and now to overlook the risk posed by future rate increases. In today’s market, variable-rate mortgages are yesterday’s news.
Finally, a quick word from Mr. Majthenyi for people who are in the middle of variable-rate mortgages with those juicy discounts of days gone by: Enjoy.
“You should hug and love those mortgages to the last possible moment because you’re probably not going to get them again.”
ROB CARRICK ,Globe and Mail Update