Sales to Decline, Home Prices to Keep Rising

Sales to Decline, Home Prices to Keep Rising

BCREA releases inaugural Housing Forecast

Vancouver, BC – April 26, 2007. The British Columbia Real Estate Association (BCREA) released its first semi-annual Housing Forecast report today. The report contains forecasts and analysis of the British Columbia economy and housing markets, including detailed forecasts by home type of the province’s twelve real estate board areas.

“Market forces have realigned,” said Cameron Muir , BCREA Chief Economist. “Some potential home buyers are now finding themselves at the wrong end of a price-led affordability squeeze, and home sales are forecast to edge down as a result.” MLS® residential sales are forecasted to dip 3 per cent to 93,600 units in the province in 2007, and a further 4 per cent to 89,500 units in 2008. The ten-year average is 77,811 units.

“A more balanced market is emerging in the aftermath of less frenetic buying activity and an increase in residential listings,” added Muir. The supply of active listings in the province increased 27 per cent to 32,879 units in March compared to the same month last year. “More balance between supply and demand will mean less upward pressure on home prices,” said Muir. The average MLS® residential price in the province climbed 18 per cent to 0,963 in 2006. This year, the average MLS® residential price is forecast increase a more modest 8 per cent to 2,000, and a further 7 per cent to 0,000 in 2008.

“Strong economic fundamentals will underpin housing demand through 2008,” noted Muir. “Robust labour demand is forecasted to keep job growth high and unemployment low. In addition, wages and salaries, and personal disposable income are forecast to rise well above the inflation rate.”

BC housing starts are forecasted to decline 7 per cent to 33,900 units in this year and a further 6 per cent to 32,000 units in 2008. While new home inventories remain at low levels, capacity constraints are inhibiting the ability of many BC home builders to increase production.


A complete copy of BCREA’s Housing Forecast is available here:

http://www.bcrea.bc.ca/economics/forecasts/2007-04 Housing Forecast.pdf

MyMortgagebc.com story

Don't sign away your Life (style)

Everyone has different lifestyles needs and spending habits, so when it comes to financing a mortgage no one calculation works for everyone. To put it another way, there�s the amount you�re qualified to borrow and then there's what you can actually afford. What�s the difference? It depends on your lifestyle. A quality mortgage broker (like me) will help determine whether or not a mortgage is affordable and what impact, if any, it will have on your life style.

A great way to help determine what kind of mortgage would fit your lifestyle is to do up a monthly budget. A budget can be simple and shouldn't really take you all that long to go through. A budget will determine your current monthly cash flow, and then a projected cash flow after you factor in all the realistic costs of homeownership.

Down payment requirements being lowered

Down payment requirements being lowered
VANCOUVER April 21 — Canada's big banks are applauding new legislation that lowers the required down payment for mortgages.

The federal government said Friday it is lowering the minimum down payment requirement for mortgage default insurance from 25 per cent to 20 per cent. The new legislation is part of Bill C-37, expected to be proclaimed next week.

Bank of Montreal says home buyers could save an average of $2,500 in insurance premiums, based on an average home price of $300,000.

“We see a number of customers scrambling to meet the 25 per cent down payment, in order to avoid paying the insurance premium,” said BMO vice-president Cid Palacio. “These changes will allow those home buyers to reduce their down payment and get into their new home faster.”

The new limit also affects individuals who intend to refinance their mortgages.

Royal Bank of Canada said a recent survey it did found 39 per cent of Canadians have borrowed against the equity of their home, by either refinancing their mortgage to a larger amount, or by taking out a home equity line of credit.

“Now, with refinancing at 80 per cent, we're making an extra 5 per cent equity available to our clients for their financing needs,” said Catherine Adams, RBC's vice-president of home equity financing.

Under the existing Bank Act regulations, which have been in place for 40 years, a bank cannot provide a mortgage loan for more than 75 per cent of the value of the property, without having the customer purchase mortgage insurance. Bill C-37 raises the loan-to-value ratio requiring mortgage insurance from the current 75 per cent to 80 per cent.

MyMortgageBC.com note: This is an important development in the mortgage industry. We haven't seen changes in the bank act for 40 years and times have changed in regards to mortgages and home ownership and it's important for the government to recognize this. Bill C-37 will go a long way in helping the average Canadian get a mortgage on their home. The only people that will be concerned will be CMHC, Genworth and AIG insurance because now they'll only be collecting insurance premiums on 80% financing rather than 75% financing.

Mortgage Rates for April 16, 2007

Here are the best mortgage rates effective April 16, 2007.

Current Bank Prime Rate 6.00%

1 yr 5.30%
3 yr 5.35%
5 yr 5.24%
7 yr 5.65%
10 yr 5.75%

Variable Prime -.90%

Most fixed rate mortgages moved up slightly last week with the increase in long term bond rates.

5 tips for young people wanting to buy their 1st home

Buying your first home as a young person can be one of the greatest things you can do for your long term financial health. I want to share 5 tips for people that are under the age of thirty that will help you get the best deal for your house. The better your credit, the easier it is to get financing for your first home.

1. Establish 3 credit accounts and ALWAYS pay them on time . Never allow the balance to go above 60% of the credit limit. It is better for you if you have the credit for at least 24 months.
2. Save until you have at least 5% of the purchase price to cover closing costs.
3. Don't take a loan for a cool car or a big screen TV. These are assets that a guaranteed to depreciate anyway.
4. Don't co-sign loans for friends. This can lead to trouble and not only for your credit.
5. Look for a great starter home possibly with suite income which is very common in the Lower Mainland.

Bonus tip: Use a knowledgable mortgage broker to help you get the best rate and to help explain the entire home buying process from start to finish. : )

Mortgage interest rates are on their way up

It looks like the other lenders will follow the Royal Banks lead and raise their mortgage rates. BMO has announced an increase and others to follow tomorrow. If you want to ensure you get the lower interest rate make sure that your application goes in today.

RBC Royal Bank Raises Mortgage Rates

RBC Royal Bank raising mortgage rates by one-fifth of a per cent

April 9, 2007

RBC Royal Bank says it will raise a wide range of interest rates by one-fifth of a percentage point, effective Tuesday.

The Royal, Canada's largest bank, said its mortgages with terms of one year to 10 years will each rise by 0.20 percentage point. A five-year mortgage, for example, will have a posted rate of 6.64 per cent.

Rates for Royal's six-month mortgages will rise by only five-100ths of a per cent. Open six-month mortgages will have a posted rate of 8.2 per cent while six-month closed mortgages will have a posted rate of 6.5 per cent.

Royal Bank is the first to announce interest rate increases in this stable interest rate environment. If I notice other institutions following RBC's lead I'll be sure to post.

Current Mortgage Rates April 9, 2007

Current Canadian Mortgage Rates

Bank Prime Rate 6.00%

1 Year Fixed 5.10%
2 Year Fixed 5.15%
3 Year Fixed 5.19%
4 Year Fixed 5.19%
5 Year Fixed 5.09%
10 Year Fixed 5.55%

Best Variable Rate Prime -.90%

Building a House in the Lower Mainland?

If you're considering building a custom-built home in the lower mainland you can pick up some tips at the Greater Vancouver Home Builders’ Association seminar April 14.

What’s New in Homebuilding takes place from 9 a.m. to 4 p.m. at 15463 104 Ave.

An effort of GVHBA and Canada Mortgage and Housing Corporation, the seminar will highlight the latest innovations in construction technology, design, indoor air quality and green initiatives. Roofing materials and installation will also be reviewed.

Cost is $60 (plus GST) per person or $100 per couple, and includes lunch and coffee breaks. Space is limited to 50 people and pre-registration required. Call 604-588-5036.

Vancouver Real Estate Channel & Website

Many people are surprised to find out that Vancouver has a TV Channel on the Novus Network for the sole purpose of advertising Vancouver Real Estate 24/7

It only broadcasts in Downtown Vancouver on Channel 80 so their focus is obviously the condo market. If your not downtown you can watch it on the Web. It is supported by selling advertising to realtors and condo developers.

Real Estate Channel Downtown Vancouver

6 Easy Ways to Improve Your Credit Score

6 ways to improve your Credit Score

Want to improve your credit score? Here are 6 tips that will help any credit score improve. Having a good credit score is very important when applying for a mortgage. A good credit score will make it easy to get great rates, 100% financing, a great selection of lenders wanting to do business with you.

1) Pay your bills on time.

This one is obvious but propably the most important factor when calculating your credit score. One big problem of being late is that it reflects on your credit bureau for at least 7 years. The longer you pay your bills on time, the better your score. If you have collections like parking tickets, if you pay it off, it will stay on your record for 7 years. Do yourself a long term favor and don’t let a bill get to the collection stage if you can help it.

2)Keep revolving credit balances low.

If you use credit cards or other types of revolving credit, either pay it off at the end of the month or try to keep the balances lower than 70% of the approved limit. This is what the credit bureau calls credit utilization. Having a low credit utilization will help your credit score. High balances will negatively impact your credit score. Don’t close unused credit cards thinking it will improve your credit score.

3)Limit your credit.

If you have a short credit history, do not open a number of new accounts in a short period of time. Opening a number of new accounts will lower your average account age, which will have a larger effect on your score if you don’t have a lot of additional credit information. Having many credit enquiries within a short period of time can make you look risky to lenders.

4)Be focused when you go for credit.

Do your credit shopping for a given loan within a focused period of time. The formulas that are used to calculate your credit score can actually distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.

5)Manage your credit responsibly.

Apply for new credit only when you need it. Avoid the temptation to open the junk mail that comes in saying you’re pre-approved for a new credit card. We you recieve those offers burn them. Assuming you make your payments in a timely fashion, having credit cards and installment loans will raise your credit score. Closing a credit account does not make it go away and will still show up on your credit report, and may be considered by the score.

6) Get credit

Someone who has no credit is seen as a greater risk than a person who has credit and manages that credit responsibly. If you have no credit it can make it challenging to get a mortgage or a loan. If you're having trouble getting approved for credit consider a fully secured credit card

Find out how the credit bureau calculates your credit score at MyMortgageBC.com

The ING Unmortgage

I'm sure you've heard the clever ING Direct ads that advertise the Unmortgage. I've had a thorough look at the ING unmortgage and can honestly say that the unmortgage is just a clever advetising campaign. If you do an 'apples to apples' comparison with the other mortgages that lenders offer you would find that ING Direct's Unmortgage offering is more or less a new way to advertise a mortgage without really offering anything innovative . I like ING Direct and have had good experiences with them but I think it's important to have a look at your own situation and determine the best mortgage strategy from there.

A Great Alternative to MLS.ca

HousingMaps.com offers an interesting alternative to MLS.ca. Housingmaps.com combines Google Maps with Craigslist and provides user the ability to see the exact house location along with the price based on whats listed on the real estate for sale section on Craigslist.org. The real estate for sale section on Craigslist.org has both realtor's listings and FSBO's making it a great place to visit if your in the market for a new house.

What will they think of next?

The Difference between a Variable and Fixed Rate Mortgage

Many people are confused between the difference of a fixed rate mortgage and a variable rate mortgage. Don't fret the difference is fairly straight forward.

If you choose a fixed rate mortgage you get pay the same mortgage rate for the term you choose. This takes the fear out of rising interest rates and can make it easier to budget for most people. If you choose a 5 Year fixed mortgage at 5.09% is simply means that the rate you'll be paying will be 5.09% for the 5 years. If rates go up you're protected but if rates go down you have to stay with your term until the 5 years is up.

If you choose a variable rate mortgage the rate is tied to the Bank Prime Rate which is determined by the Bank of Canada. If the Bank of Canada lowers the Prime rate you benefit from a lower rate and if the Prime rate goes up so does your mortgage rate. Most lenders offer you the choice to convert from a variable rate mortgage to a fixed rate mortgage with no penalty.

At the time of this post most analysts believe the Bank of Canada won't be raising the Prime rate anytime within the near future and possibly even lower it.

Mortgage Supplement in The Province

If you are a reader of the Province….a couple of great articles in the Mortgages: A Special Supplement section. I encourage you to check it out.

1) “Canadians prefer fixed over variable” …RBC did a survey and it suggests even though people know the will save $ they still prefer fixed terms

2) “BMO stops using outside broker, expands own sales force” ….they believe offering different rates at the branch level vs broker level was confusing to the customee.. BMO doesn't mention it owns MCAP which is one the most popular mortgage lenders through mortgage brokers.

3) “Housing central to boomers’ needs”…..boomers are using the equity in their homes to renovate, purchase vacation homes, help their kids purchase, purchase investment properties and invest in the stock market - sounds like a lot of opportunity for mortgage brokers.

4) “Subprime woes stay south” …..it seems we are still ultra conservative on our lending criteria – compared to the US anyway

There's a New Lender in Town

There's a new lender called Abode Mortgage Corporation and it's mortgage underwriting department and head office are located in Vancouver BC. Abode will be offering it's mortgages to the public through mortgage brokers rather than an expensive branch network. Any time a new lender comes in to the market it's great news for the consumer because hopefully as a new lender they'll offer some innovative mortgage products and great rates.

Mortgage Broker vs Bank Mortgage Rep

I'm often asked whats the difference between a Mortgage Broker and a Bank Mortgage Specialist. There are many differences.

Most banks now have a mobile mortgage sales force. These mobile mortgage reps can go by various names such as Mortgage Development Manager or Mobile Mortgage Specialist etc. Below are just some of the differences between a Mortgage Broker and a Bank Mortgage Rep.

1) The mortgage rep from the bank can only provide with options sold by their institution which means that if you are declined or they don't have the product you need, too bad for you. A Mortgage Broker like myself will always get the lowest rate or if you're declined on your first application we have access to many different lenders that may be interested in your deal.

2) If the bank the mortgage rep works for doesn't offer the lowest rate for the term you're interested you lose out. A mortgage broker has access to the best deals.

3) Mortgage rep is employed by the bank and is not required to go through the training required to become a mortgage broker. In British Columbia all mortgage brokers are required to take the Mortgage Brokers offered through UBC.

4) Mortgage Brokers are not employed by any one bank therefore are advise is unbiased.

The above are just some of the reasons why a mortgage broker can offer you value added services the Bank Mortgage Specialist cannot. Keep in mind that the above list in not conclusive and just some of the differences.

BMO Announces a NOT So Special 5 yr Fixed Rate

BMO's best 5 year fixed rate is 5.38% and this is considered their special offer. Any mortgage broker can easily get their clients a fixed 5 year rate at 5.09% with similar features that the BMO mortgage offers. I'm glad I'm not a client of BMO's getting their "special offer" rate. BMO recently stopped using mortgage brokers to help build their mortgage portfolio and I think it's clear now that the reason is to charge a higher rate to their clients. It's unfortunate but further demonstrates the value of a good mortgage broker.