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.

14 Feb

Great Payment Giveaway


Posted by: Chris Cavaghan

Free Mortgage Payments for a year, what a great deal. You have 4 chances to win. Draws will be done quarterly, first draw will be March 1st.

If your mortgage funds with me between Dec 1, 2010 and Feb 28, 2011, you will be entered in the March 1st draw and the next 3 consecutive draws. Mortgages funded between March 1st and May 31st, you will be entered in the draw on June 1st draw and the next 3.

Refinances and purchases both qualify. Let anyone you know that may be thinking about a mortgage to give me a call or check out my website, rules at the resources link on the left.

Good Luck!!

18 Jan

No increase to Prime Rate


Posted by: Chris Cavaghan

The Bank of Canada held their lending rate steady today, stating “the cumulative effects of the persistent strength in the Canadian dollar and Canada’s poor relative productivity performance are restraining this recovery in net exports and contributing to a widening of Canada’s current account deficit to a 20-year high.” This along with “a significant source of uncertainty” from the worldwide market is keeping our Prime rate at 3%.

At the same time, measures introduced Monday by Finance Minister Jim Flaherty to clamp down on household debt, by making it harder for people to take on more obligations than they can afford, will likely give the central bank more flexibility to wait until it makes sense to raise rates throughout the economy rather than doing so to discourage a small subset of borrowers.

Governor Mark Carney hinted that if he could raise rates he would. Most economists are expecting the next increase to come in the second quarter.

Any questions or comments? Please email or give me a call any time.





17 Jan

New Changes to CMHC guidlines


Posted by: Chris Cavaghan

The Honourable Jim Flaherty, Minister of Finance, and the Honourable Christian Paradis, Minister of Natural Resources, today announced prudent adjustments to the rules for government-backed insured mortgages to support the long-term stability of Canada’s housing market and support hard-working Canadian families saving through home ownership.

“Canada’s well-regulated housing sector has been an important strength that allowed us to avoid the mistakes of other countries and helped protect us from the worst of the recent global recession,” said Minister Flaherty. “The prudent measures announced today build on that advantage by encouraging hard-working Canadian families to save by investing in their homes and future.”

“The economy continues to be our Government’s top priority,” continued Minister Paradis. “Our Government will continue to take the necessary actions to ensure stability and economic certainty in Canada’s housing market.”

The maximum amortization for insured mortgages is now 30 years, down from 35.

The maximum loan to value for refinances is now 85%, down from 90%.

They have withdrawn government insurance backing on lines of credit secured by homes, such as home equity lines of credit, or HELOCs.

The previous changes made in 2008 did not affect the market too drastically. I think these changes will strenghten our ecomony more and secure it down the road.

If you have any questions, please do not hesitate to call or email me.

1 Nov

Forecasting rates


Posted by: Chris Cavaghan

Last week I sat in on a Firstline seminar and had the chance to listen to Benjamin Tal, the senior economist for CIBC. He made some very good points about the mortgage market, the global economy and where it is all headed.

He started off by saying the international markets used to affect our economy 2-6 months after the fact. That has completely changed and we are seeing the affects almost instantly.

Some the factors from other countries that are affecting us are from China, Europe and of course, the US.

China has increased their rates recently to slow down their economy. Their debt is actually quite higher than they are showing. They were using some creative ways to get government funding. Now the government doesn’t want it to get out of hand so they increased rates.

The US is showing some positive news but the numbers may not be as accurate as they are saying.

Most of the improvements in the economy have been due to the cash the Fed is injecting into the markets. There is not a lot of improvement in the economy and it will mostly likely stay that way for another 12 months so the Fed will have to continue to inject cash until the economy gets it footing.

The States is saving more and the debt to income ratio is falling which is good. Their income seems to be increasing as well but it is not from wages, it is from tax deductions.

Europe is still having their problems as well and it is not going to be over soon.

These factors will be affecting our markets and it will be very difficult for the Bank of Canada to increase rates until these international economies start to recover on their own without continuous help from their governments.

The bond market, which directly affects fixed rates, will also see the affects of these situations that are occurring in other countries and should stay low as well.

He concluded by saying that rates, both Prime and fixed, will be holding steady with minor increases over the next year.

Any questions of comments please feel free to let me know.