16 Aug

Canadian Home Prices


Posted by: Chris Cavaghan

Home prices continued to decline across the country in July, according to Canadian Real Estate Association data released Wednesday.

The Ottawa-based group said the average price of a home sold last month was $353,147, a decline of 2% from a year earlier. The year-over-year decline in June was 0.8%.

“Prices are off their recent peaks in Greater Vancouver and Greater Toronto, but remain above year-ago levels in most markets,” the group said in a release.

Activity was up from the previous month in Kingston, Ont., Chilliwack, B.C., and Calgary, offset by fewer sales in Toronto, Newfoundland and Labrador, and Edmonton. Actual sales across the country were up 3.3% overall from a year ago.

Much of the decline in the national average can be blamed on Vancouver’s volatile market.

The city’s average sale price dropped more than 12% to $667,462 from $761,763 last year.

A senior economist at Royal Bank of Canada said the city’s lack of affordable homes is pulling down the market.

“We still believe that Vancouver is probably the most stressed market right now because of extremely poor affordability,” said RBC economist Robert Hogue.

“Plot the resale figures over the last year or so and you see a fairly significant decline in resales, so I think that this does the fit the definition of correction,” he said.

But a B.C. real estate economist said speculation of a market correction in Vancouver is unwarrwanted, as the economy continues to heal.

“Typically to see a price correction you need to see a macroeconomic shock — recession, very high unemployment, for example — or you need to see interest rates go up very dramatically in a short period of time. Both of those we don’t see on the horizon,” said Cameron Muir, the British Columbia Real Estate Association’s chief economist.

He said one-third of the market is first-time buyers, of which the market has no shortage.

“As long as we have first-time buyers that can get into the market to buy the homes from the people who are moving up, moving over, moving down, then the market should remain healthy,” Mr. Muir said.

Meanwhile, Toronto experienced a cooling, with prices increasing at a slower rate of 3.9% year over year, which BMO economist Douglas Porter called a “just-right” pace in a note Wednesday.

Mr. Hogue said the market across Canada is moderating and low resale numbers in the past three months were a result of compensation for a strong winter market and do not necessarily spell an impending pronounced correction.

“We believe that much of this easing was payback for a stronger-than-expected start to the year when warmer than usual weather this past winter and mortgage rate promotions by financial institutions provided a temporary boost to activity,” he said.

The Canadian Real Estate Association said tighter mortgage and lending regulations seemed to have cooled Canada’s national housing market, even in the bigger markets.

“Recent changes to mortgage regulations were widely expected to temper sales and prices in Greater Toronto and Greater Vancouver, and the data released today confirms that,” said Wayne Moen, president of the association, in a statement.

Finance Minister Jim Flaherty said Wednesday it may be too early to determine the extent of the impact of mortgage insurance reform, but that market moderation is a good thing.

“We want to avoid, obviously, the kind of thing that happened in the U.S. market, the Irish market and other markets in the Western economies with respect to their housing. So we want to have moderation,” he told The Canadian Press



21 Jun

Mortgage rule changes


Posted by: Chris Cavaghan

Hello everyone

For the 4th time in 4 years there are more changes today in the mortgage industry.

The federal government has been warning Canadians that the household debt is getting out of control and it hit a record high of 152% of household income last year. 

Due to this the following changes have been made.

The maximum amortization for insured mortgages is now 25 years, brought down from 30 years.

The maximum loan to value for refinances is now 80%, brought down from 85%.

There are no changes to the minimum down payment needed to purchase a home, that is still 5%.

I know some of you are looking to purchase a home right now. This will make a significant change in your purchase price that you are approved for.

I have not come across the date the changes will take place, but reducing the amortization from 30 year to 25 years is going to reduce the amount you are qualified for.

Please call me or email me when you get a chance and we can go over your pre-approval.

If you know anyone that is trying to get into the market please let them know I am available for any questions they may have.

This may be a bit of a shocker but I am sure it will help our economy in the long run by reducing the debt we are used to carrying.

1 Nov



Posted by: Chris Cavaghan

Lately the insurers have not been following their guidelines to the letter. They are making their decisions based more on the whole deal, rather than the debt service ratios and it is making it more difficult to give pre-approvals.

The lenders are approving the applications but the insurers are declining because they “feel” there is too much risk.

Below is an article about self employed individuals but there are similar instances for anyone who does not have a guaranteed salary or income.

While lenders are showing renewed willingness to loosen their purse strings for the army of self-employed borrowers, default insurers are making it tougher to get those deals done, a very frustrated principal broker told MortgageBrokerNews.ca.

“The minute I start to get questions from CMHC or Genworth about a non-income qualifying mortgage application, I know that it’s going to be rejected,” said Vittorio Oliverio with Centum Professional Mortgage Group. “We have a lot of lenders satisfied with the borrower’s downpayment and ability to pay, but what we are finding is that the insurers are the ones that are rejecting those applications. They have guidelines and they should stick with them.”

The concerns mirror those of other brokers from across the country who are now seeing the pendulum swing back from the dark days of 2007/8 when broker channel lenders had all but closed their doors to non-income qualifying mortgages. But while banks and mono-lines are increasingly willing to fund those equity deals at prime rates, they are still demanding default insurer backing.

That’s where brokers are hitting a snag, said Oliverio, who works the entrepreneurial-rich Alberta market. The Canadian Federation of Independent Business, in fact, identified his Lethbridge community as one of the country’s Top 10 “most entrepreneurial cities.” Seven other Alberta centres also made the cut.

Oliverio and other brokers across the country see the business-for-self market as a key growth area for an industry looking to grow originations in a slowing market. The statistics back them up with more than 22 per cent of Canadians now self-employed.

Many of those clients fit within CMHC guidelines for equity mortgages of 75 per cent loan to value. Winning that insurance is the difference between accessing today’s prime rates as opposed to those in the B market. But insurers have now retreated to more conservative standards, outside of their own guidelines, said Oliverio.

“They don’t appear to be allowing gifted down payments and they scrutinize the business’s cash flow and question income even though sales support that income,” he told MortgageBrokerNews.ca, suggesting the hyper-scrutiny keeps clients from winning mortgage amounts appropriate to their income and down payment.

The increased difficulty in getting insurer approval appears to contradict the position of lenders.

“It used to be that 80 per cent of the deals were rejected by the Schedule A banks,” Bob Woods, of Assured Mortgages, told MortgageBrokerNews.ca. “But the banks are beginning to adopt a common sense approach rather than being reactionary as they were even a year ago. They are back in the business of dealing with self-employed.”

28 Jun

Positive Second Half


Posted by: Chris Cavaghan

Some more positive news regarding the upcoming months. Victoria’s real estate market is flooded with listings and 5 year Fixed mortgage rates are extremely low, with the Variable rate mortgages at a low risk choice as well.


By Christopher S. Rugaber,Paul Wiseman, The Associated Press

WASHINGTON – Farewell and good riddance to the first half of 2011 — six months that are ending as sour for the economy as they began.

Most analysts say economic growth will perk up in the second half of the year. The reason is that the main causes of the slowdown — high oil prices and manufacturing delays because of the disaster in Japan — have started to fade.

“Some of the headwinds that caused us to slow are turning into tail winds,” said Mark Zandi, chief economist at Moody’s Analytics.

For an economy barely inching ahead two years after the Great Recession ended, the first half of 2011 can’t end soon enough. Severe storms and rising gasoline prices held growth in January, February and March to a glacial annual rate of 1.9 per cent.

The current quarter isn’t shaping up much better. The average growth forecast of 38 top economists surveyed by The Associated Press is 2.3 per cent.

The economy has to grow 3 per cent a year just to hold the unemployment rate steady and keep up with population growth. And it has to average about 5 per cent growth for a year to lower the unemployment rate by a full percentage point. It is 9.1 per cent today.

As welcome as the stronger growth envisioned in the second half is, the improvement should be modest. For the final six months of the year, the AP economists forecast a growth rate of 3.2 per cent.

So far this year, high gas and food prices have discouraged people from spending much on other things — from furniture and appliances to dinners out and vacations. That spending fuels economic growth.

And some U.S. auto factories had to suspend or trim production after the March earthquake in Japan interrupted supplies of parts and electronics. American dealerships have had fewer cars to sell.

The latest dose of glum news: The government reported Monday that consumer spending was about the same in May as in April, the first time in a year that spending hasn’t increased from the previous month.

The report confirmed the toll that high gas prices, Japan-related disruptions and high unemployment have taken on personal spending in the second quarter.

“Here’s to a better third,” says Jennifer Lee, senior economist at BMO Capital Markets.

Relief is in sight, economists say. Oil prices have been falling since Memorial Day. The drop has lowered the price of regular unleaded gasoline by 23 cents in the past month, to a national average of $3.57 a gallon, according to AAA.

The timing of the drop in gas prices is especially fortunate because they usually rise during summer driving season, says Robert DiClemente, chief U.S. economist at Citigroup .

And the kinks in the global manufacturing chain are starting to be smoothed out as the Japanese factories that make cars and electronics resume production.

Diane Swonk, chief economist at Mesirow Financial, says auto sales should improve “quite substantially” later this year because the lost production from the earthquake is coming back faster than had been expected.

One sign of that rebound came when the Federal Reserve Bank of Chicago reported Monday that manufacturing in the Midwest rebounded in May after falling sharply in April.

And last week, the government said orders for machinery, computers, cars and other durable goods rose slightly in May after dropping in April. Economists attributed the turnaround, in part, to Japanese factories that started to rev up.

The U.S. economy is also expected to get a slight second-half boost from reconstruction in flood-ravaged sections of the South and Midwest. Construction workers will be employed rebuilding homes and businesses. People will replace destroyed cars and other possessions. Analysts predict the economic losses from the floods in the April-June quarter will be reversed in the July-September quarter.

The economists surveyed by AP predict unemployment will fall to 8.7 per cent at year’s end. It is not exactly the start of a boom: The economy is still carrying too much baggage from the financial crisis — damaged banks, depressed home prices, debt-burdened consumers — to achieve much liftoff.

Though some of the economy’s weakness in the first half is temporary, “it is hard to see much on the horizon to cheer about,” Swonk says.


AP Economics Writer Martin Crutsinger contributed to this report.



17 Jun

10 Reason not to panic


Posted by: Chris Cavaghan

There stll seems to be some hesitation in the Victoria real estate market. Fixed and Variable rate are incredibly low and the amount of inventory on the market is staggering, and the average price for a home is increasing. What are people waiting for? It could be all the negative news that is spewing out of the media. But, here is some positive news from the Financial Post that will hopefully start spreading.
The European sovereign debt crisis, a potential hard landing in China, weak U.S. economic data, and the U.S. debt ceiling debate have provided investors with plenty to worry about. Since none of these problems look like they will be resolved in the immediate future, don’t be surprised if global financial markets continue to be in a rough patch for at least a few more weeks.
Despite the unpleasant stew that is brewing, it is not noxious enough to either derail the economic recovery or upend the market rally of 2011, says Joseph P. Quinlan, chief market strategist at U.S. Trust, Bank of America Private Wealth Management.
In a recent research note, Mr. Quinlan points out that June is often a lousy month for equities, as the Dow Jones Industrial Average has fallen for the past six years.
“Early indications are that this June will be no better,” he says. “However, beyond the daily gloom and doom, investors should not overlook the fact that the financial markets and global accounting, while facing some stiff headwinds, also have a number of significant tailwinds working in their favor.”
The strategist provided ten reasons why investors should not panic.
1. Corporations are flush with cash
After a two-year profit boom, corporations are putting this money to work in the form of both climbing capital expenditures and hiring. At the same time, share buybacks and higher dividends are on their radars. So despite the deleveraging of U.S. households and the government’s credit limit challenge, the strong capital position of many corporations will be an important driver of the economic expansion in the medium term.
2. Unemployment numbers are misleading
The U.S. unemployment rate remains elevated at 9.1% in May 2011. However,95% of the skilled labour force is currently employed as workers with four-year college degrees or more have an unemployment rate of 4.5%. This cohort accounts for a disproportionate share of personal consumption.
3. U.S. exports are going strong
Total exports hit an all-time high of US$172-billion in March 2011. With the weak U.S. dollar and continued growth overseas, exports should remain strong over the medium term and cement America’s position as the top exporter of goods and services globally.
4. State finances are improving
The weak housing market continues to put pressure on state finances, but the worst is over for many as better-than-expected retail sales and other receipts are helping to establish a floor for their financial position.
5. The Fed isn’t changing its stance
The Fed’s second round of quantitative easing is due to conclude at the end of June, but the central bank’s benign monetary stance will be maintained well into the second half of 2011. The Fed is expected to err on the side of too-easy money rather than premature tightening, unlike the European Central Bank.
6. China will engineer a soft landing
With some US$3-trillion in reserves, the Chinese government has the wherewithal to keep growth in the 7% to 8% range in the near term. Despite challenges such as rising wages and higher food and energy costs, China’s economy may slow, but it will still grow faster than most countries again this year. It managed to post more than 9% GDP growth in 2009 as the global economy slumped.
7. Economic weakness provides relief for food and energy prices
The soft patch for global economies will help contain inflation risks and improve consumer sentiment around the world.
8. The euro crisis will be contained
The euro zone’s wealthiest member, Germany, will provide both the political will and capital to prevent Greece, Portugal or Ireland from imploding.
9. The U.S. debt ceiling will be raised
The debt ceiling has been increased more than 100 times in the past. Once this happens again, the focus will shift to tackling the U.S. federal budget deficit.
10. Everyone is not broke
Nor are they in the midst of austerity campaigns. In fact, the IMF estimates that developing nations have somewhere around US$7.5-trillion in international reserves. The deployment of these excess savings will come faster as a result of slow growth in the United States and Europe, helping the global economy maintain a growth rate of 3.5% to 4% in the near term.
2 Jun

What is the minimum down payment for a house purchase?


Posted by: Chris Cavaghan

I heard today, on 2 separate occations, people thinking that they need more than 5% of the purchase price as a down payment on a house or condo.

With the changes CMHC made this year and in 2010, I guess some people are confused.

The changes were made to the amortization, or the length of the mortgage the payments are based on, and the refinancing rules.

There has been no change to the minimum amount you need to put down.

5% down is the minimum to get best rates. But with the low rates were are experiencing now, you can even get away with 0% down. There are certain conditions that apply to that type of mortgage though so please ask me if you think that might suite you.

If you ever hear of anyone thinking they need 10% or even 15% down on a purchase, please have them call me so I can explain the actual numbers with them.

5 year fixed mortgage rates are continuing to drop and there is no expected increases coming.

Have a great weekend and please pass the word on about the minimum down needed!!

19 May

Mortgages in Victoria


Posted by: Chris Cavaghan

The fixed rates may be coming down a little more, RBC finally lowered their 5 year fixed rate by 10 basis points. Their mortgage rates are still much higher than other non branch lenders though.

The variable rates are still constant at Prime minus .75% or better.

An article yesterday stated that sales numbers have dropped but prices are still increasing, mostly in due to Vancouver’s values increasing. The strong market on the mainland usually keeps Victoria’s strong as well.

Please feel free to email or call if you have any questions about financing or the real estate market.

12 Apr

What are the banks doing?


Posted by: Chris Cavaghan

In the last week the big banks have increased their 5 year fixed mortgage rates by 30 basis points. The bond rates have increased by only 10 basis points.

It looks like the banks are trying to increase their earnings by charging their clients more when it doesn’t look like they need to. How much more do they need to make?

The credit unions have reduced their rates.

Now there is a 74 basis point difference in the 5 year fixed rate between the big banks and our credit unions.

For a $300,000 mortgage amortized over 30 years, there is a $11,452 difference in interest over 5 years. That is a large amount to be losing out on by using a bank.

This is creating a very good opportunity for those high interest mortgage holders right now.

The penalties for refinancing into a lower rate mortgage will be calculated on the increased rates, reducing them ,but your new rate will be much lower increasing the potential savings.

If the penalties were scaring you off before, this is a good time to take another look.

Please contact me if you have any questions or comments.

1 Mar

No change to Prime


Posted by: Chris Cavaghan

The Bank of Canada held its lending rate this morning as expected. The state of the rest of the world’s economy being the most significant reason for not tightening up the monetary policy. The quote below leaves the decision unknown for April’s meeting. It was expected that they would increase their lending rate in April but now it looks to be uncertain.

“Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered. “

The remaining article is available at


15 Feb

First Draw for Free Mortgage Payments


Posted by: Chris Cavaghan

Harbourview Mortgages first draw for Great Payment Giveaway!

Date:  Tuesday March 1st 2011
Time: 6:00-8:00 PM
Place: Oyster Bar, 618 Humboldt St.