Back from space

It's been awhile since I posted -we have seen interest rates drops to all time lows and rebound by 30 percent in the space of 3 months.  Is now still the time to lock in ...my gut feeling is interest rates will trend back towards 5 percent over the next few years and prime will likely move from the current 3 percent  range to 5 percent in a few years .... So if you want to be conservative ..lock into a longer term rate of 4-10 years.  If you can afford to take risk -consider a variable rate but set your payments based upon a 4 percent rate and you will payoff more principal and get used to a slightly higher mortgage payment than necessary. As always if you have questions contact me at greygoose@rogers.comor bill@e-canadianmortgages.com

Off to get the house ready for fall.......

times - they are a changing

its been awhile since my last post - but interest rates have reacted as predicted
there was a spike in the long term rates from a low of 3.69 to 4.64 in April and Early May.
Lenders immediately boosted the long term interest rates and are now enjoying a massive profit spread of approximately 1.9% over the government of canada 5 year bonds - this means there is plenty of room to drop rates - but i doubt they will unless business volumes drop and they want to entice borrowers back to the table
the Variable rate is at prime less .50 (currently 1.75%) and is likely the best option for those with strong stomachs and good equity in their homes
if the prime rate was to double from 2.25% to 4.5% - the variable rate would still only be 4%

greygoose out.

after Christmas - before New Years

Santa has come and gone - and we did in fact receive a gift of lower interest rates from Santa - as the 5 year mortgage rates drifted down to 3.79% range...while the variable rate was prime less .20-.25 (2.00%) - the spread being approximately 1.75%
the government of canada bonds have adjusted to provide a profit spread in the range of 1.3% which is at the lower end of most lenders spectrum -thus we can possibly expect a spike upwards in the rates - to approximately 3.99% in the new year if the spread holds.
Make no mistake -the bank of canada has warned consumers rates will increase in the new year - likely around June - i would expect the variable rates to increase by .50% and likely by a full 1% by the end of 2010 - the fixed rates will likely increase to 4.75%...(just my guess...) which means variable rates will be at 3% and fixed will be at 4.75% - THEN 2011 - i expect rates on the variable side to increase another 1% to 4%.....if you can lock in 5 years below 4%...now is the time to act...i may be wrong - but over 30 years of experience tells me rates will not stay low forever and when they move - they will move quickly.
back to the greygoose and olives...see you in the new year.

rates move up slightly

this past few weeks we have seen the fixed interest rates spike by approximately 35 basis points (.35%)
Variable rate mortgages have dropped a bit as they are now available at prime less .10bp (2.25-.10)
the spread between a fixed 5 year and a 5 year variable is approximately 2%.
4.19 fixed versus 2.15%
The bank of Canada - has expressed concern with the rapid rise of the Canadian dollar - but what can they do ? - if the US raises rates - perhaps the Canadian dollar would drop as investors chase the higher yield - but for now it would appear we are deemed to be a gold and petro currency.
We definitely live in interesting times

greygoose out.

the pot is simmering

Here is the latest on Gold which has spiked over $1000 per ounce - which should now form a base of support at the $1000 level.

Gold* (GOLDC : NYMEX : US$1013.50)
Net Change: -6.70, % Change: -0.66%
"We wants it, we needs it. Must have the precious." - Gollum (The Lord of
the Rings: The Two Towers). Advocating precious metals and speaking about
the gloom facing the U.S. dollar is nothing new for Eric Sprott, but this
time he has highlighted some eye-opening numbers (to say the least) that
would give even the most optimistic U.S. media bull the chills. Sprott
starts out by noting that over the last six months there has been a
substantial increase in anti-U.S. dollar rhetoric from China, Japan,
Russia, France, Brazil, and even the United Nations. Reading between the
lines, Sprott states that it appears as though the U.S. dollar hegemony has
finally broken, and what happens next will have major consequences for the
global economy. To fully understand the debt predicament currently faced by
the United States, Sprott says it's best to look at the numbers. U.S.
Government revenues for the 12 months ended August 31, 2009 were ~ US$2.2
trillion from all sources. According to the U.S. Department of the
Treasury, the current outstanding debt as of August 31, 2009 is ~ US$11.8
trillion. To this (Sprott says) we must add the unfunded promises that the
U.S. Government has made to its citizens. The National Center for Policy
Analysis (NCPA) estimates that the unfunded portion of the U.S. Social
Security program totalled US$17.5 trillion as of June 2009. The NCPA also
estimates that the aggregate unfunded promises for Medicare total a
whopping US$89.3 trillion. Sarcastically, Sprott states that you probably
don't need a calculator to realize that the U.S. can never cover the debt
costs on US$118 trillion. Even if the U.S. Government were to spend 100% of
their tax revenues on debt payments, the absolute maximum they could
rationally borrow today couldn't exceed US$64.2 trillion (US$2.157 trillion
divided by 3.36% (current weighted annual interest rate)). The numbers just
don't add up. Sprott highlights that the Chinese Government, which is by
far the largest foreign investor in U.S. Government debt, is fully aware of
the current situation. Recently, China has even gone so far as to promote
the purchase of gold and silver to its citizens. Silver bullion is now
being advertised on Chinese television as a prudent investment for the
general public. Chinese banks have even planned to sell gold and silver
bullion bars in four different sizes. This represents a fundamental change
in Chinese policy where the distribution of gold and silver was once
strictly controlled. In summary, Sprott believes the most likely outcome
will be a U.S. dollar crisis. It is for this reason that he has positioned
his hedge funds and mutual funds so heavily in precious metals. At the end
of the day, when the world finally realizes what the U.S. has done to the
world reserve currency, international investors will shift into an asset
that no government can print. In Sprott's opinion the U.S. dollar's status
as a 'port' in the financial storm has officially come to an end.

Currently mortgage rates are holding steady - 5 year is around 3.99% and the variable rates are at Prime+.20 (2.45%)
many people are taking the variable rate in the hopes of riding the wave until the prime rate increases - after all the prime has to increase by 1.5% in order to reach 4% (roughly the current 5 year rate)
I would not suggest this strategy for those who are highly leveraged ..ie 90% loan to value on their homes - keep your eyes open - rates will move up next year ...the million dollar question is when..and by how much

greygoose out...enjoy the remaining dog days of summer - ....

as the beatles say...were on our way home

Well we are on our way back from Myrtle Beach South Carolina and the PGA Superstore World amatuer golf tournament. this is a four day event similar to the US Open where you compete against people from all over the world in your own category range...or so it should be (there appear to be a few sandbaggers in the mix)
In any event it is a great time - for fun and comeraderie. Joanne and I have participated in 14 of the 26 years of the tournament - this year she finished 9th in her division and i finished 12th. All in all a very satisfying showing.
While we were away interest rates have softened again to 3.99% for 5 year money - it cant stay low forever - it may be time to consider locking for the 5 years and as Mickey blue eyes says.... forget about it.

renovation tax credit #2

How does the Home Renovation Tax Credit work?
Canadian homeowners can claim a 15 percent, non-refundable tax credit for eligible expenditures of more
than $1,000, but not more than $10,000 – for a maximum credit of $1,350 ($9000 x 15%). Based on
information currently available, it appears the HRTC applies to ‘do it for me’ and ‘do it yourself’ projects,
and may be claimed in addition to support from the existing ecoENERGY retrofit program and the medical
expense tax credit.
Taxpayers can claim the HRTC when filing their 2009 tax return.
Examples:
• Sally and Ed are a couple who have recently purchased a house. In response to the temporary
HRTC, they decide to replace their old windows and improve
the insulation in their home in 2009, rather than waiting, incurring $10,000 in expenditures this
year. After taking into account the $1,000 minimum threshold, a 15-per-cent credit will be
available on $9,000 in eligible expenditures, providing tax relief of $1,350.
• Karen and Heather are sisters who share ownership of a condominium unit. They each incur
$7,500 in expenditures renovating the kitchen in the condo. Karen and Heather each claim a
$975 credit on eligible expenditures of $6,500 ($7,500 - $1,000).
Who is eligible to participate, and what are the conditions?
Family members (spouses or common-law partners and their children under 18) are subject to a single
limit based on their pooled expenditures. The credit is only available for a dwelling that is eligible to be the
family’s principal residence or that of one or more of their other family members.

renovation tax credit - federal government

Here is the draft outline of the Federal Home Renovation tax credit - remember the first 1000 does not get a tax credit - the next 9000 gets 15% for a total of $1350 on a 10,000 investment

Information Bulletin: Federal Government HRTC –
The Home Renovation Tax Credit (Page 1 of 2)
The recently announced budget features a very useful tax credit for homeowners, The
Home Renovation Tax Credit (HRTC) . See below for the answer to some common
questions on how it will apply.
THE INFORMATION CONTAINED IN THIS SUMMARY HAS BEEN OBTAINED FROM THE BUDGET DOCUMENTS PUBLISHED
BY THE FEDERAL GOVERNMENT AND IS BEING PROVIDED FOR THE CONVENIENCE OF OUR CUSTOMERS. THE
FOLLOWING SETS OUT OUR UNDERSTANDING OF THE HRTC AND IS NOT MEANT TO BE RELIED ON OR TAKEN AS TAX
OR LEGAL ADVICE. TO ENSURE THE ACCURACY OF THIS INFORMATION AND ITS APPLICATION TO YOU, PLEASE
REVIEW THE DOCUMENTATION PUBLISHED BY THE GOVERNMENT AND, IF YOU REQUIRE FURTHER INFORMATION,
PLEASE OBTAIN FROM YOUR OWN FINANCIAL ADVISORS. ADDITIONALLY, ALL INFORMATION INCLUDED IS SUBJECT TO
ANY CHANGES THAT MAY BE MADE BY THE GOVERNMENT.
What types of products, services and expenses are eligible?
Eligible
• Renovating a kitchen, bathroom or
basement
• New carpet or hardwood floors
• Building an addition, deck, fence or
retaining wall
• A new furnace or water heater
• Painting the interior or exterior of a house
• Laying new sod
• Labour costs;
• Professional fees;
• Building materials;
• Fixtures;
• Equipment rentals; and
• Permits
Ineligible
• Furniture and appliances (refrigerator,
stove, couch);
• Purchase of tools;
• Carpet cleaning; and
• Maintenance contracts (furnace cleaning,
snow removal, lawn care, pool cleaning,
etc.)
When will the HRTC begin and end?
The HRTC will apply to eligible home renovation expenditures for work performed, or goods acquired,
after January 27, 2009 and before February 1, 2010, pursuant to agreements entered into after January
27, 2009.
Page

and so the world continues....

Well - President Obama visited Ottawa this week - and did more to promote Canada in 5 short hours than Stephen Harper and the Conservatives have done in the past year. He said- i love this country - and bought a beavertail (for those of you who dont know - its not an actual tail...its a pastry deep fried and topped with toppings like butter and cinnamon sugar or garlic and cheese).
Interest rates have dropped since i las posted -prime is at 3 per cent
5 year money is as low as 3.99 - the lowest i have seen in 30 years in the business.
The gloom and doom scenario continues to dominate the news - so lets think about this logically...if there is such a thing as logic.
If all property values drop - people will continue to pay their mortgages and their homes will be a place to live instead of a get rich quick opportunity. (It should have been treated as a place to live from day one).
The stock market values have plummeted and people see their RRSP values dropping by 50 per cent or more - especially the Canadian Banks (as i write this Bank of Montreal is paying an 11 per cent dividend). Are we in for doomsday ?
i dont think so...will it be a tough few years ?...absolutely
So why are the banks dropping - i would suggest its the American Investors selling shares to raise cash - and since there are 10 times the people in the USA they have more control over our stock market as their Mutual funds invest in Canadian Banks - albeit in small amounts - but when everyone is running from financials - the baby tends to get thrown out with the bath water.
I have been a huge proponent of gold and gold stockst moving up..and we are seeing that happen
and now i am buying Canadian banks in the belief that they will flourish over the next 3 years - and i will receive a great divident until it turns around
I also am of the mind- i dont care about the underlying share value as long as they keep paying me the dividends - i dont need the capital but i do like the cashflow from dividends
in any event - time to watch the oscars. ...let me know if you have questions
Refinance - to payoff debt and stay as liquid as possible - but dont forget the addage - buy when everyone else is selling
greygoose out.

Happy New Year 2009

Hi All
rates are stable at the moment and it looks like we will see another drop in the prime rate on January 20th when the bank of canada sets their rate.
currently the prime is 3.5% and variable rates are available at prime plus .50 to prime plus 1%
5 year money is in the range of 4.65 - 4.99%
the market has slowed down and we are constantly being bombarded by news of job losses and doom and gloom.
Now is the time to prepare for 2009 - refinance - make sure you have good liquidity and can carry your debts througn 2009 and 2010.
we may see a bounce but i dont see a major bounce in the economy until late 2010---- but that is just my humble opinion - would love to hear what you have to say....
greygoose out
ps. on a 15 day cleanse program -damn i miss coffee / wine and my greygoose..........

update - beam me up scotty

as the year draws to a close - we have seen the prime rate drop over the past few months as central bankers try to keep the entire financial system of the world -liquid.
We have seen the market slow down and i have seen many people in financial trouble before Christmas - this is very unusual - we dont normally see the 'cracks form until after january or february visa and mastercard bills hit the mail'
it will be a difficult winter - hunker down and stay tuned
until then
Have a Happy New Year and remember the sun will come up tomorrow - no matter what happens...
i am here if you need help or to chat

greygoose out...where are the olives ?

mayhem in october

as we near the end of october - we have seen market panic. Interest rates in Canada for the variable (floating) rates have moved from prime -1% to prime plus 1% and then the bank prime has dropped 3/4 of a percent....but really they have increased by 1.25% thus increasing the bank spreads.
fixed rates have increased by approximately 50 bp....the canadian banking system is in much better shape than many other countries, but we will not escape this mayhem.
the question remains..in the long term will consumer demand drop and cause deflation or will the massive amounts of money from the US treasurey cause inflation....that is the trillion dollar question as there are no more million or billion dollar questions - they are too small.

mortgage mayhem

the US mortgage market has come apart - and congress is now trying to negotiate a 700 billion dollar bailout - this may stabilize the market for a short time but will it work for the long run ?
the entire world will be affected - rates will rise but they cannot skyrocket - or the economies will stall and a major recession will occur.
try to payoff debts - refinance to reduce monthly outlay - will keep in touch
greygoose out.

govt steps in to chage canadian mortgage market

very interesting
the government has changed the lending regulations for insured loans as of October 15th
they are eliminating 100% financing and requiring a minimum 5% downpayment (no clarification yet on whether clients can still borrow the 5%)
reducing the amortization from 40 years to 35 maximum
adjusting the maximum ratio for qualifying to 45% of gross income (still too high in my opinion)
this is all a function of the US spillover - we certainly live in interesting times

greygoose out.....

steady as she goes

interest rates are holding relatively steady - but the major lenders are playing games. they will give you a pre-approval which is generally a higher interest rate than if you were actually purchasing or refinancing.
then they will give you a better rate 30-45 days prior to closing for 'real' transactions.
what is the downside ? - if you are renewing or looking to lock into a fixed rate from a variable or floating rate - you will likely get a higher interest rate than the lenders very best rate because they are keeping their' 'posted discount rates' higher.....instead of 5.15-5.29 you would likely get 5.39-5.49% - oh the games they play to try and take advantage of the consumer....

down down down..but for how long ?

the bank of canada dropped their target rate by .50% this week - but the major chartered banks took approx 8 hours to follow suit. It would appear the major banks are trying to signal to the bank of canada - they do not want to drop rates any further - which tends to go along with my conspiracy theory - which says banks hate lending money below 6%.
the spreads on the bankers acceptance puts the current variable rate mortgages into a negative position - and the lenders are saying they must cut the spreads on the variable product.
they have already dropped from prime less .90 to prime less .60 as an average and it will likely drop further to prime less .25 - 40....which is likely a more reasonable spread. The banks got themselves into this mess by constantly trying to out do each other and increasing the discounts until they werent making any money...at least thats what they say.
now is likely still the time to take a variable product with a front end load over 6-12 months - but keep your eyes on the 5 year mortgage rates - currently around 5.50%..if they start moving up lock in and as they say in the movies.....forget about it......

rates come down - update since March

Well we returned from the Masters - won by Trevor Immelman - as usual it was a great week.
we returned to see that most of the mounds of snow had disappeared - it looks like we will fall approximately 8cm short of the record.
interest rates are still softening on the short end - bank prime is 5.25 and likely to fall another quarter to one half of one percent this week.
the 5 year money is 5,29-5,49
lenders are playing interesting games by giving a bigger discount within the last 30 days - thus mortgage approvals are being switched between lenders 120 -90 - 45 - 30 days prior to closing.
never a dull moment.
it still appears we are heading for a recession - i still think the average consumer has far to much debt and will be forced to consolidate to survive within the next year.
time will tell
greygoose out.

long time no blog

its been approximately a month since my last blog.
interest rates have continued to soften
currently lenders a giving bigger discounts for quicker closings - which reduces their costs of hedging any positions.
5 year money closing within 45 days - currently 5.39
5 year money closing within 30 days - currently 5.25
5 year money closing within 120 days - currently 5.69-5.74
prime has dropped 1/2 and will likely drop another half - inflation continues to pick up - eventually rates will bounce back - but for now - ride the wave

greygoose out

bed race complete

as this year's 90th President of the Kiwanis club of Ottawa - i was participating in the Bedzz race on the Rideau Canal yesterday - it was a great day with 39 teams pushing modified hospital beds down a 100 metre course on the frozen Rideau Canal. it would appear we raised over 40K for the Kiwanis Club of Ottawa - sponsored youth programs like our Read a thon which in 6 short years has reached 223 schools world wide in 11 countries and over 50,000 children per year.
Interest rates are dropping the cracks are forming in the wall posted by the major lenders - they are now starting to compete for business by dropping their rates - but is it interesting many are refusing to provide the best rates for their pre-approvals, why ?...because there is work involved and many do not become solid transactions - so they are only providing the best rates when people actually have a property to finance...rates are as low now as 5.49% for 5 years...and i still think they will continue down into the spring...
call us if you want to purchase or refinance
greygoose out....613-563-5083

roller coaster ride

isn't it amazing how one headline can change the perception of 'so called' investors
The US data comes out and once again a report outlines 'US heading for a Recession'
the stock market tanks and people panic.....welcome to reality - as Tim McGraw says in his song..i'm already there..take a look around......
the recession is upon us - the markets are slowing - rates will drop - and the world will not come to an end.
For now - take the floating rate
the 5 year dropped today below 5.79 - we actually have a quick close of 5.65%
and 4 year money below 5.50%.....stay the course unless you are nervous....rates will come down some more .....

greygoose out