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101 Series- 4 Strategies to Deal with today’s Uncertain Housing Market – Ask a Vancouver Mortgage Broker

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4 Strategies to Deal with today’s Uncertain Housing Market

If you are a bit worried or concerned  how to deal with today’s volatile housing market, here are 4 strategies you can use to help you feel more confident and feel more at ease.

 1. Live in your home for at least 10 years.

Housing forecasters are predicting everything from a softening in the housing market to a sharp decrease in home prices. There are also those who believe that housing prices will just keep rising well into the foreseeable future. Most of these predicators center around what is being forecasted for the both the near term and the medium term.

So, this means that if you are planning to stay in your home for the next 10 years or more than you will have a better chance of seeing the current volatile economic market make a recovery from any declines and you begin to see an improvement which will also have a positive boost of house prices rising once again when things improve.

It might take a bit longer in larger markets like the Vancouver or Toronto housing market, but if you look at the last major recession of the late 1980’s when the housing market did pick up, it took off like the proverbial rocket.

From a market perspective, even if prices do fluctuate and home price increases don’t occur as dramatically as they recently have been doing so, you will still be able to build equity in your house simply by paying down your mortgage over that 10 year time frame

2. Prepay your Mortgage in Lump Sum Payments

Any money which you pay towards your mortgage payment which is above and beyond your regular mortgage payment is immediately applied to paying down your outstanding principal. Over time this will also raise the equity you have in your home and reduce the amount of overall interest you will pay for the remaining portion of the life of the mortgage.

It doesn’t matter if you can’t make a big prepayment as the majority of lenders will allow you to “double-up” your payments. This means that you can add an extra payment in any month that it is financially convenient for you to do so.

There are some lenders who will even allow an extra payment as small as a $100. And, what about your tax refund? If you’re not too sure what to do with it then consider using it as an additional prepayment towards you mortgage.

3. Save for a 20 % Down Payment.

There is no question that this is a tough task for anyone to do. The average Vancouver detached home was valued at $1.116 million dollars in April of this year. This means that a mere 5% down payment would cost you $55,800 dollars while a 20 percent down payment would run you at a whopping $223,200 dollars.

If you did have the ability to save up the 20% down payment then it would be to your advantage because you would automatically have a significant amount of equity built into your home. On the other hand, if you can only manage a 5% down payment, and if prices to drop you could end up owing more than the actual market price of your home.

Additionally, if you can manage to save the 20 percent down payment then you have the added advantage of not having pay for mortgage insurance which is generally added on top of what you have to borrow if your down payment is less than 20%. This would save you additional money on the interest you borrow.

4. Get a 10-year Mortgage.

Although a 10 year mortgage costs more than a 5 year mortgage, the advantage of getting a longer mortgage will give you added long term protection as the international economy continues to crawl out from it current global economic mess. You also won’t have to worry about re-qualifying if lenders become increasingly nervous later on. You’ll be covered for the entire decade which should be adequate enough time for the world economy to stabilize and begin a period of prosperity.

How to Prepare Your Home for Viewing – Consult with Bruce Coleman

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How to Prepare Your Home for Viewing

Planning to sell your Vancouver home?

If you answered yes then these tips should help sell your home more quickly.

First, you want to get a pad and pen and start a checklist of what needs to be done beforehand. Break your home into areas and rooms. Put yourself in the shoes of the buyer and ask yourself what your first impression would be if you were touring your house for the first time.

Selling a home quickly is all in the details.

Fix the Exterior and Put out the Welcome Mat

The first thing anyone is going to see when they step out of the car to view your home is the front yard. Curb appeal creates a first impression and puts the buyer in a mindset even before they step inside your home.

You want to make sure the grass is mowed and raked, and the flower and shrub beds are weeded. Sweep or use the hose on the both the driveway and walkway. Trim away all the dead foliage and add a little colour with some flowers to give the place a more homey appeal.

Get the details right and get the buyer thinking that the people who own this house care about their home’s maintenance.

What Are They Going to Smell and See?

Ask yourself what scent are they going to take in with the first breath when a prospective buyer steps inside. You want clean and not musty or cooking odours. Before you have your first buyer inside, you want to clean so that the house is spic and span clean. You want your home to smell fresh.

If your walls are showing a bit of wear and tear, then think about doing some prep work and a paint job. It might be well worth your while to replace a few faucets if they’re showing their age.

Focus especially on the washrooms and the kitchen as they are 2 key areas that a prospective homebuyer looks at when they’re viewing a home.

Get Rid of the Clutter

A cluttered home looks cramped and detracts from a room’s perspective of having space.  Pack up your bric-a-brac and memorabilia and pack them away. You want to think “show home.” Have a professional shampoo the rug or do it yourself if you’re on a budget.

Tidy up those closets. If they look too cramped them maybe pack away some of your winter and fall clothes.

And, don’t forget to tidy up the garage, basement, and laundry room as well. Make every room look neat and organized.

If you’re not going to be around when the home is being shown then you should also give thought to putting your valuables in a safe location and not accessible to viewers.

When you leave, make sure the place is well aired and put out fresh line, clean dish towels and bath towels.

Get the details just right because they make all the difference in how quick or how slowly you the home will sell. Your realtor will also have a lot of great advice about prepping your home so take note because if you want to sell quickly, it’s always the little things that stand out.

Toronto real estate: Cottage country sales rebound from wet spring

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2013 heralded as turnaround point for market that’s been flat since 200

By: Susan Pigg Business Reporter

Should you Lock in your Mortgage? – Contact Bruce Coleman

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Should you Lock in your Mortgage?

Many analysts are of the opinion that it wouldn’t be such a bad idea to lock in your mortgage for the next 5 – 10 years.

However, they also suggest that you shouldn’t overlook a variable rate even with today’s somewhat turbulent interest rates. It might sound somewhat risky to do so as some international markets continue to be unpredictable and volatile.

Whenever one country appears to be approaching a critical level, interest rates tend to be lowered, but the question remains whether this trend can be depended upon to continue.

The banking regulators continue to tinker with the mortgage rules especially when it comes to high-down-payment mortgages.

Most savvy borrowers seem to be of the mindset that the trend will eventually come to an end so the question is how can you keep your mortgage cost low and protect yourself against future rate increases.

One approach that you could take is to lock in your mortgage. If you have a variable mortgage you can change it to a fixed-rate mortgage at no cost to you and go with either a 5 year or ten year fixed mortgage. Some lenders have increased their 5 year fixed mortgages by 0.2 of a percentage point just recently.

The reason is that they were reacting to an increase on the 5 year Government of Canada bonds. Bond yields as you know often impact how mortgage rates perform, but the market is still so competitive that lower rates are still to be found. But, it still might not be a bad idea to lock in your rate.

On the other hand, other analysts say there is no immediate rush to do so because the international economy is still somewhat wobbly and it wouldn’t take too much to cause rates to be lowered further. The main area of concern centers on certain economies in Europe. Both Japan’s economic practices and slower growth in China may also be impacted by the sluggish recovery of the U.S. economy.

Another factor which impacts interest rates is the inflation rate. The inflation rate continues to remain low and that also puts the breaks on potential rate increases. However, there is a possibility that the Bank of Canada may be more interested in seeing that the inflation rate rises instead of the reverse.

If the Bank of Canada does adopt an approach of increasing the rate of inflation, this is another argument that some analysts still think that it might be better to lock in your rate now as opposed to later on.

The prime rate is governed by the Bank of Canada and that rate has remained at 1% since September 2010 and is expected to remain so until the later portion of next year. The prime rate isn’t impacted like bond yields which are affected by large institutional investors and the rise and fall of the stock market which affects bonds.

Many see the 5 year bond yield as moving towards more normal levels but they may continue to increase for about another year or so before doing so.

With such volatility in the air, many experts feel you simply can’t go wrong if your lock in your mortgage for either a 5 or ten year period.

Low interest rate party may be ending – Consult with your Vancouver Mortgage Broker

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Watch the bond market and QE moves for early warnings that interest rates will start to rise in Canada.

By: Gordon Pape Building Wealth, Published on Sun Jun 23 2013

Bank of Canada will raise overnight interest rate in July 2014: Bruce Coleman, Vancouver Mortgage Broker

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By: Alexandra Posadzki The Canadian Press, Published on Wed Jun 19 2013

Mortgage rate hikes shouldn’t torpedo the housing market – Bruce Coleman, Vancouver Mortgage Broker

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LARRY MACDONALD- Special to The Globe and Mail

Many housing bears think that the recent increase in mortgage rates is the beginning of the end for the Canadian housing market. I’m not convinced; here are some reasons why.

Fixed-mortgage rates have gone up because they are tied to bond yields, which have been rising lately. That’s because investors are selling bonds and other defensive holdings on signs the North American economy is gaining momentum. In such an environment, they would rather have more of their portfolios in cyclical and growth investments.

What’s also to be expected as the economy gathers steam is growth in employment and household incomes. Importantly for housing, this will serve as an offset to the drag of rising interest rates.

Fears about tumbling house prices at the national level thus seem overblown at this stage. In fact, a recent empirical study found that the majority of increases between 1980 and mid-2010 did not undermine house prices.

Furthermore, variable-rate mortgages, which are linked to the Bank of Canada’s lending rate, won’t be increased until late 2014 according to Bay Street forecasts and futures markets. This should help keep housing affordable while employment and income move into a more supportive position.

Actually, mortgage rates hikes are initially positive for the housing market. They encourage prospective buyers to get off the fence and buy a home in hopes of avoiding further increases.

But it’s premature to say an uptrend in fixed-mortgage rates has started. Usually more than one or two upticks are required. And whether or not we get many more jumps in bond yields is debatable. For one thing, the Federal Reserve will be working hard to head off such increases (or rein them back in) through announcements and actions that allay bondholder jitters over too-rapid an uptake in economic activity. The U.S. Federal Reserve has already started the process by jawboning about its plans to taper off monetary stimulus.

Even if an uptrend were to emerge, Canada has a greater capacity to absorb increases than the U.S. had in 2007. Close to three-quarters of Canadian homeowners now have fixed-rate mortgages, so rate increases feed slowly into the market since only a portion come due each year. In 2007, about 75 per cent of U.S. mortgages had variable rates and the Fed was aggressively driving them up.

Larry MacDonald is a retired economist who manages his own portfolio and writes on investing topics.

He tweets at @Larry_MacDonald

2013 housing sales off to better start than expected – Bruce Coleman, Vancouver Mortgage Broker

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Canadian Press | 13/06/17 |

Sorry to inform you, but ‘The Great Real Estate Crash of 2011…no…2012…no…2013′ has been postponed

OTTAWA — The number of Canadian homes sold so far this year is slightly higher than projected and it looks as if 2014 will show a rebound, according to a new forecast by the Canadian real estate industry’s main association.

The Canadian Real Estate Association said Monday it still expects fewer sales this year than in 2012 but says the decline will be smaller than what was predicted in March. It also projected that next year will show more sales than in 2013 or 2012.

“Until recently, it seemed that the only debate on Canada’s housing market was whether the landing was going to be of the soft or rough variety. Well, it appears that housing may not be so keen on landing at all at this point,” said BMO Capital Markets chief economist Douglas Porter.

“Sorry to inform you, but “The Great Real Estate Crash of 2011…no…2012…no…2013” has been postponed until 2014, or until further notice. More seriously, we believe housing remains on track for a fabled soft landing.”

CREA is now estimating 443,400 units will be sold in 2013, a decline of 2.5% from 454,573 in 2012. It had previously projected a decline of 2.9% from 2012.

CREA says the sales activity began to pick up at the end of the first quarter and accelerated in the second quarter.

The association also says 2014 will see a strong rebound, with 464,300 units of housing sold — about 9,700 more than last year.

The number of transactions dropped off in the second half of 2012 after new mortgage rules for lenders and buyers were introduced by the federal government last summer.

CREA reported there were 51,764 residential properties of all types sold across Canada last month, down 2.6% from May 2012.

On a month-to-month basis, May showed a 3.6% increase from April with 37,792 units and 36,473 units sold on a seasonally adjusted basis in the first two months of the second quarter.

The association’s home price index was up 2.3% in May, compared with a year earlier. That was slightly better than April’s HPI of 2.2% but still near two-year lows.

The May national average price, for all types of property in major markets across Canada, was $388,910 — up 3.7% from a year earlier. Almost all of the local markets that make up the average saw year-to-year increases.

The case for locking in your mortgage – Bruce Coleman, Vancouver Mortgage Broker

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ROB CARRICK – The Globe and Mail

A variable-rate mortgage entails a vulnerability to possible short-term rate increases by the Bank of Canada.
(RAFAL GERSZAK FOR THE GLOBE AND MAIL)

You can’t go wrong if you respond to this week’s mortgage rate increases by locking in for five or 10 years.

But at least consider the alternative: Variable-rate mortgages sound risky in today’s volatile interest rate environment, but they’re actually a quiet corner of the mortgage world right now.

We’ve had several rising-rate episodes in the past few years, but they’ve invariably fizzled. In each case, one of the many global economic trouble spots has gone critical and caused rates to retreat. Will this latest rate spike unwind itself, too? Can our low-rate utopia last indefinitely?

Smart borrowers today work on the assumption that the answer is no. The question, then, is how to best keep mortgage costs low today while also protecting against future increases.

Let’s consider the lock-in option, first. That’s where people with variable-rate mortgages convert at no cost into a fixed-rate mortgage, and new home buyers go with a five- or 10-year fixed rate mortgage. It happens to be an excellent time to lock in, even if some banks have boosted their special five-year fixed mortgages rates by 0.2 of a percentage point this week.

The banks were responding to a big runup in the yield on the five-year Government of Canada bond, which sets the trend for five-year mortgages. But thanks to a highly competitive mortgage market, lower rates are still available. Kim Arnold, a broker with Dreyer Group Mortgages in Vancouver, said earlier this week that she was able to get a very competitive five-year rate of 2.89 per cent for clients.

“Rates are phenomenal, even with this latest increase,” she said. “It’s certainly not a bad time to lock in.”

David Larock of Integrated Mortgage Planners in Toronto sees zero urgency for locking in, mainly because of the potential for yet another global economic scare to send rates lower. Europe’s problems with high government debt levels and slow economic growth could do it. So could Japan’s rickety economic fundamentals, worry about weakening growth in China or uncertainty over the sturdiness of the U.S. economic recovery.

Low inflation is another constraint on rate increases, Mr. Larock said. “I think the Bank of Canada is probably more concerned about getting inflation to go up as opposed to going down.”

It’s this line of thinking that leads Mr. Larock to make a case for the variable-rate mortgage, where your rate rises and falls along your lender’s prime rate.

The prime, in turn, is guided by the Bank of Canada’s benchmark overnight rate of 1 per cent, which hasn’t moved since September, 2010, and is expected to remain steady until the latter half of next year.

“The prime rate moves when the Bank of Canada changes their rates, and they’re not going to jump around like the market does in terms of what happens with five-year Government of Canada bonds,” Mr. Larock said. “These bonds are subject to the vagaries of large institutional investors, and to the ebb and flow between the stock market and bonds.”

Another reason to look at variable-rate mortgages is that the discounts have improved recently. Mr. Larock said it’s now possible to get a variable-rate mortgage with a discount of as much as 0.5 of a point off prime in some provinces.

That means a rate of 2.50 per cent, which compares to a range of 2.72 to 3.29 per cent for discounted fixed-rate mortgages over five years, depending on which lender you deal with.

If you go with a variable-rate mortgage, you’re vulnerable to the short-term rate increases the Bank of Canada will eventually start using to keep economic growth under control.

Toronto-Dominion Bank’s economics department expects a half-point rise in the overnight rate in the fourth quarter of next year.

As for five-year fixed rates, they could retreat again in the weeks and months ahead if there’s another global economic scare. But TD chief economist Craig Alexander said the broader trend in the bond market is the start of a move toward more normal levels. Next year, he sees the five-year Canada bond yield at 1.85 per cent, up from 1.60. “I think bond yields are going to grind higher, but 1.85 per cent on a five-year Government of Canada bond is still incredibly low.”

The best strategy for most people today is to lock in quickly to today’s best five- or even 10-year rates (read my case for the 10-year mortgage online at tgam.ca/DqYG). As Ms. Arnold, the Vancouver mortgage broker, put it, “I don’t honestly think anyone can make a mistake by locking in.”

———-

Mortgage Rate Survey

A range of best rates available from banks and through mortgage brokers

Source: RateHub.ca

What your parents didn’t teach you about money – Bruce Coleman, Vancouver Mortgage Broker

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By Gail Vaz-Oxlade | Online only

As I crossed the country earlier this year promoting my latest book, Money Rules, I spoke with thousands of university and college students about what it takes to not make the mistakes their parents made. Let’s face it, my generation has done a gawd-awful job of setting an example for the young’uns who are just starting out. Here are some important lessons your parents likely didn’t teach you, at least not in practice:

Don’t spend money you haven’t earned yet. If you let yourself get distracted by new and shiny as your parents have, you’ll end up carrying a whack load of consumer debt just like mommy and daddy. Show you have some self-control. Demonstrate that you know how to prioritize. Live within your means.

Your income and your stuff don’t say jack about you. My generation has bought into the branding tomfoolery like no generation before. If you define yourself by the labels you wear, by the model of the car you drive or the amount of money you make, you’re walking in the wrong footsteps. Let’s face it, a guy who makes $100,000 a year selling stuff people don’t need isn’t a better person than the guy who makes $35,000 helping an autistic child integrate into a classroom and learn to socialize. Your actions define who you are.

How much you make doesn’t matter as much as what you do with your income. Sure, you may not make bundles of money, but if you can live a worthwhile life and make your money do what you need it to do, you’re way smarter than the Ritchie Rich with the flashy lifestyle and debt-rot at the root of his financial foundation. Live a real life and keep track of every penny.

Watch who you choose for your peer group. Once upon a time we measured ourselves against our family, friends and neighbours. (Hey, you can say we shouldn’t measure ourselves against anyone, but that’s just not reality!) My generation decided to measure how we’re doing against the people we see on TV and in magazines.  If there were no décor-porn, we’d all feel a little less like our homes constantly need upgrading. You don’t need granite counter-tops to turn out healthy and delicious meals for the family. Build a life of substance and focus on what’s really important: stability, happiness and a sense of belonging.