Refinancing Archives - Page 47 of 49 - Bruce Coleman, Senior Vancouver Mortgage Broker Archive - – Bruce Coleman, Senior Vancouver Mortgage Broker

26 Jun

2013

Alycia

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

The impact of a soggy spring continues to be felt across Ontario cottage country, where sales — and prices — in many regions are down slightly from last year.

Yet 2013 is being heralded as a possible turnaround year for the recreational market, which has remained essentially flat since 2007, according to a new report by ReMax.

The rebounding real estate market south of the border, and the arrival — finally — of summer, have led to a surge in both Canadian and international buyers looking for sun or ski properties, says the report released Tuesday.

“The U.S. was on sale for a long, long time, but now that house prices have picked up dramatically over the last six or eight months, and the dollar has softened somewhat, Canadian recreational properties are looking more attractive,” says Gurinder Sandu, executive vice president and regional director of ReMax Ontario–Atlantic Canada

Realtors have reported an uptick in the purchases of cottages, second homes and ski-resort properties by both international buyers and out-of-province buyers in Bracebridge/Gravenhurst (mainly Europeans and Asians), Whistler (buyers from Hong Kong and Singapore) and Nova Scotia’s south shore (buyers from the U.K.), notes the report.

Recent blips in the stock markets and concerns that interest rates are starting to creep up are expected to have just a short-term impact on the recreational property market, said Sandu. In fact, because prices are down or unchanged in 77 per cent of the markets examined in the report, and the for-sale inventory is higher than usual, buyers seem to be biting again, he noted.

Recreational sales remain on a par or ahead of last year in 70 per cent of the markets studied, and Ontario realtors say the arrival of summer seems to be making up for some of the time lost to cold weather and flooding in the spring.

“It used to be that January and February were the really busy times, but it’s basically becoming busier over the summer and fall now, and especially the fall the last three or four years,” says realtor Rick LaFerriere, who sells mainly in the Lake Simcoe and Lake Couchiching area north of the GTA.

LaFerriere is seeing a surge in demand from Muskoka cottage owners, and other buyers who’ve grown weary of Highway 400 traffic and are looking for properties closer to Toronto.

“With travel time playing an increasingly important role in the recreational lifestyle, properties in close proximity to the Greater Toronto Area are experiencing a renaissance,” the report says.

Prices are still averaging under $600,000, for the most part. But baby boomers, in particular, have helped push the price of properties on the western shore of Lake Simcoe up to an average $910,000 in the Innisfil area and $680,000 around Oro, it notes.

That’s still about 20 to 25 per cent less than the price of Muskoka real estate, says Sandhu, and means an hour or so less time spent in traffic.

“We’ve seen some interest from international buyers, but baby boomers are still a huge part of the market here,” says LaFerriere.

“Over the last two to three years, we’ve seen a lot of people who are buying the cottage for the family — not so much for themselves, but for their kids and their grandkids.

“They are people who’ve worked hard, maybe too hard, and maybe missed a lot of time with their family and are now bringing them back together. It’s kind of nice to watch.”

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25 Jun

2013

Alycia

Should you Lock in your Mortgage? – Contact Bruce Coleman

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Should you Lock in your Mortgage?

Vancouver Mortgage Broker 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.

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25 Jun

2013

Alycia

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

Vancouver Mortgage Broker The interest rate party for borrowers is almost over. After almost five years of historically low rates, we’ve started to see some upward movement in the cost of money.

Most people watch the central banks for indications that rates are about to take off. But that’s not where the real action is. It takes place in the rarefied world of the bond market where institutional traders like banks and pension plans operate. By the time the Bank of Canada gets around to acting, the bond market will have left it in the dust.

The first warning shot occurred a couple of weeks ago after some governors of the U.S. Federal Reserve Board indicated that the time has come to consider scaling back the quantitative easing (QE) program that is pumping $85 billion a month in new money into the economy.

Professional bond traders took that as a signal that interest rates would start moving higher. Bond prices dropped sharply (as yields rise, prices fall). The rate on 10-year U.S. Treasuries shot through the 2 per cent barrier and kept on climbing. On June 19, they spiked to 2.35 per cent after the Fed confirmed that it plans to begin dialling back QE later this with a view to ending the program by mid-2014.

Stock markets around the globe sold off. Interest-sensitive securities of all types plunged, leaving investors shell-shocked. Besides bonds, defensive stocks such as utilities, REITs, and preferred shares were all hit hard, as were the mutual funds and ETFs that invest in them. I was deluged with emails from worried readers asking what had happened.

I think the stock market sell-off was overdone and that the bond market will rally. But as far as bonds go, it will only be a temporary respite. If the economy continues to improve, interest rates are going to move higher in the next few years, perhaps more quickly than many people expect. The impact will be significant, both for borrowers and investors.

Anyone with a variable rate loan will see carrying costs move higher. Former Bank of Canada Governor Mark Carney repeatedly warned of the danger this would create for households on tight budgets. For every $100,000 in debt, interest costs increase by $1,000 annually with every 1 per cent rise in rates. Currently, most big banks are charging prime plus 1 per cent for a five-year variable rate mortgage. With prime at 3 per cent, that means the cost to you is 4 per cent.

When rates start to move higher, the trend normally continues for a long time — perhaps several years. As recently as the fall of 2007, the prime rate was 6.25 per cent, meaning that a variable rate mortgage would cost 7.25 per cent to carry. That’s an increase of more than 80 per cent in your interest cost.

How high can rates go? Well, in the early 1980s prime actually peaked at 22.75 per cent! That was an era of high inflation and I don’t expect to see anything even close to that again. But it gives you an idea of the risks involved. One solution is to lock in a longer term mortgage now. Another is to keep the variable rate loan but increase the monthly payments. You’ll reduce the principal faster and create a cushion in your budget for when rates rise.

For investors, higher interest rates will mean more downward pressure on the prices of the defensive securities that have performed so well in recent years. That’s because as rates rise, low-risk alternatives like new government bond issues and GICs become increasingly attractive. If you can get 5 per cent from a guaranteed investment certificate that’s covered by deposit insurance, you’re going to expect to receive more from riskier REITs and dividend stocks. For that to happen, they have to increase their payouts or watch the market price decline. For example, RioCan REIT lost 14 per cent of its value between April 30 and June 13. During that period, the yield on the units increased from 4.76 per cent to 5.54 per cent, based on an annual payment of $1.41 per share.

In this case, there are a number of steps you can take to protect your money. The most obvious one is to increase your cash position by selling some vulnerable assets. As rates rise, so will the returns on high interest savings accounts and short term deposits.

Bond fund investors should consider shifting more money into short-term funds and ETFs (maturities of less than five years). They are not immune to losses but the downside is minimal compared to the risk inherent in, say, a 20-year bond. Alternatively, if you own bonds directly (not through a fund) keep it until maturity when you’ll be reimbursed at face value. In that case, you can ignore price fluctuations.

None of this is going to happen overnight. Despite the recent rate shock, this is likely to be a gradual process so you have time to make adjustments. Just don’t make the mistake of assuming the low interest era will last forever. It’s already started to wind down. Take whatever action is necessary before the trend starts to accelerate.

More Gordon Pape columns

Gordon Pape is editor and publisher of the Internet Wealth Builder newsletter. His website is www.BuildingWealth.ca

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21 Jun

2013

Alycia

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

Bank of Canada

The Bank of Canada is likely to start raising its benchmark interest rate in July 2014, a full year before the U.S. Federal Reserve, BMO’s chief economist Douglas Porter said Wednesday.

Porter predicts the overnight rate will go up by half a percentage point, which could put upward pressure on the Canadian dollar until the U.S. raises its interest rates the following summer.

“If the currency gets too strong then the bank will likely stand back and won’t raise interest rates as much as what we’ve predicted,” Porter said following a speech he gave at the Toronto Region Board of Trade on Wednesday.

The strong Canadian dollar has been a major impediment to Ontario’s manufacturing sector, said Porter, combined with weaker demand for goods from the U.S. and fierce competition from China.

“While I think the (manufacturers) that have survived are very competitive, that doesn’t mean that it’s an easy ride from here on out,” said Porter.

“They likely need the combination of either a weaker Canadian dollar or a better U.S. economy to continue to thrive.”

Overall, Porter predicts the global economy is headed for a better year in 2014 on the back of growth in the United States and more stable conditions in Europe.

The U.S. economy will grow at a faster pace than Canada’s for the next few years, said Porter, helped by a comeback in house prices south of the border.

“For a number of years Canada was outpacing the U.S., and now we’re in a situation where there’s just a lot more pent-up demand in the U.S. than there is in Canada,” said Porter.

“Our consumer has tapped out, there’s not a lot of room for domestic spending to grow, and we think that the tables have turned and that’s going to be the story for the next number of years.”

The U.S. growth should help boost the economy north of the border, said Porter, and “put a floor under” commodity prices, but they’re unlikely to reach the peaks they have seen over the past years.

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21 Jun

2013

Alycia

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

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21 Jun

2013

Alycia

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.

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21 Jun

2013

Alycia

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

Type	Best rates available (%)
Variable rate	2.50 to 2.60
One-year	2.39 to 2.59
Two-year	2.49 to 2.69
Three-year	2.49 to 2.69
Four-year	2.69 to 2.89
Five-year	2.72 to 2.89

Source: RateHub.ca

21 Jun

2013

Alycia

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

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Let’s face it, Baby Boomers haven’t set the greatest example for those who are just starting out.

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.

21 Jun

2013

Alycia

101 Series: Reasons to Buy Title Insurance for Your Vancouver Home

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Reasons to Buy Title Insurance for Your Vancouver Home

There are a lot of little details that you have to take into account when buying a home or condominium in the bustling metropolis of Vancouver.

One of these oft overlooked details is known as “Title Insurance.”

So, what is title insurance and why do you need it?

Title Insurance Explained

Title insurance protects you from encountering and being encumbered by a number of legal issues that can easily complicate your life and cause you to end up in a costly litigation situation.

Although you would like to believe that everything is being handled by professionals on your behalf, you shouldn’t have to concern yourself with any worry about what happens behind the scenes.

Although most home or condo purchases go through without a hitch, sadly to say this is not always the case. So, what kind of potential legal issues could you encounter if you don’t have title insurance to give you that extra protection?

Some of the potential issues you could encounter when you are buying a Vancouver property could include the following:

Issues involving property taxes which are still outstanding
Zoning issues
Mistakes made by the property surveyor which is challenged by a bordering neighbour or business owner
Other financial liens which might be attached against the property such as by a collection agency or other forms of judgements
A fraudulent title
Encroachment issues

So, as you can see from the above list which is not all inclusive, there are a variety of legal issues which can throw a wrench into buying your dream home.

Simply put, title insurance can provide you with a valuable form of insurance protection which can help you if you get caught in one of these types of legal entanglements.

Is Title Insurance Expensive?

That’s the beauty of title insurance. It is not all that expensive and it covers you for as long as you own your home. I suggest you do some comparison shopping as generally speaking the prices for the insurance range anywhere from around $150.00 to $350.00, but it really is well worth your while to have it.

You should also know that many lenders will require you have this insurance coverage before you can get approved on your mortgage anyway. Even if they don’t require that have you coverage, if have taken the time to purchase the insurance it will help smooth your way through the application and approval process

You can get title insurance directly through your lender as many of them offer a policy for their clients. Your other option is to get it either directly from your insurance company or through your insurance broker. Some policies are sold as a separate rider which you can buy along with your homeowner’s insurance policy.

However you buy it, I highly recommend you consider buying title insurance for that extra piece of mind and to protect yourself from a potentially costly legal lawsuit.

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20 Jun

2013

Alycia

Trade and Investment to Support Canada’s Economy In 2013: RBC Economics

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Real GDP to increase to 1.9 per cent in 2013

TORONTO, June 19, 2013 — Canada’s economy started 2013 growing at a solid clip, as energy production continued to recover and the U.S. economy proved to be more resilient to a recession than was feared, according to the latestEconomic and Financial Market Outlook issued today by RBC Economics. Following an increase in Canadian GDP output of 1.7 per cent in 2012, RBC raised its real GDP growth forecast to 1.9 per cent through 2013 and expects a firmer 2.9 per cent rise in 2014.

The first quarter of 2013 saw a marked turnaround in the domestic economy, with Canada realizing a solid 2.5 per cent annualized gain, supported by a sharp turnaround in net trade which added 1.4 percentage points to the quarterly growth rate – the largest contribution since mid-2011.

“The improving trade balance underpins our forecast for Canada’s economy to grow at rates which should help propel the economy to full capacity in early 2015,” said Craig Wright, senior vice-president and chief economist, RBC. “Stronger demand for autos, houses and industrial machinery from the U.S. will help sustain the lift in export growth that Canada experienced so far this year for the remainder of 2013.”

Businesses reduced the pace of investment in structures and capital goods in recent quarters, likely a reflection of the uncertainties surrounding the effect of U.S. government’s fiscal restraint on U.S. demand for Canadian goods. Easy financial conditions in Canada coupled with indications that the U.S. will clear the fiscal cuts in good stead will support a rebound in business spending in the quarters ahead, RBC says.

“Company balance sheets are healthy – business financing made headway in early 2013 and will continue to provide Canadian firms with the capacity to invest at an accelerating rate in 2014,” said Wright. “After rising an expected 3.7 per cent this year, business spending will strengthen to 7.3 per cent in 2014.”

RBC says export recovery and business investment are necessary to keep the economy on track and to offset a softer housing market. Residential investment is forecast to decline 2.4 per cent this year and 0.7 per cent in 2014. This slowing partially reflects overstated strength in 2012 when residential investment jumped 6.1 per cent as home sales increased – likely to avoid a tightening in mortgage lending and fear of mortgage rate increases.

Cooling activity in the housing market led to a reduction in the pace of mortgage debt growth to the slowest level since 2001 in April, easing concerns that the economy is vulnerable to a significant shock. In fact, RBC indicates that debt service costs remain historically low and one-third of households continue to be debt free.

“The firm labour market is another factor mitigating the risk that a debt-associated downturn is brewing,” noted Wright. “With employment at an all-time high and household income and savings on the rise, we expect household debt to remain in check, which should limit the weakness in the housing market and support consumer spending.”

An easing in household credit growth coupled with a low level of inflation set the stage for accommodative monetary policy in early 2013. RBC says that new Bank of Canada Governor, Stephen Poloz, will likely maintain interest rates at the current level for the remainder of 2013, and expects the Bank will start to reduce the amount of stimulus in the second half of 2014.

Globally, RBC expects the world’s economy to continue growing at a modest pace in the first half of 2013 as a result of Europe’s ongoing struggle to get out of recession and the U.S. economy absorbing government austerity measures. Growth is likely to accelerate later this year, however, as the benefits from structural changes combined with very supportive interest rates boost global economic momentum.

After a generally disappointing finish to 2012, the economic performance across the majority of Canada’s provincial economies improved in early 2013. RBC forecasts that natural resource-intensive provinces will remain at the top-end of the growth rankings in 2013 and that stronger exports will be the mainstay for many of Canada’s provinces.

Newfoundland and Labrador will outpace all other provinces by a long shot to stand atop the 2013 provincial growth rankings. The Prairies – Alberta, Saskatchewan and Manitoba – will continue to grow at the top-end. The remaining provinces are expected to stand slightly below the national average for growth.

A complete copy of the RBC Economic and Financial Market Outlook is available as of 8 a.m. ET. A separate publication,RBC Economics Provincial Outlook, assesses the provinces according to economic growth, employment growth, unemployment rates, retail sales, housing starts and consumer price indices.

– 30 –

For more information, please contact:

Craig Wright, RBC Economics Research, 416 974-7457
Paul Ferley, RBC Economics Research, 416 974-7231
Elyse Lalonde, RBC Corporate Communications, 416 842-5635

Tags: Bruce Coleman, Entrepreneurs, self-employed, Vancouver Mortgage Broker

26 Jun

2013

25 Jun

2013

25 Jun

2013

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

21 Jun

2013

21 Jun

2013

21 Jun

2013

21 Jun

2013

21 Jun

2013

21 Jun

2013

Reasons to Buy Title Insurance for Your Vancouver Home

There are a lot of little details that you have to take into account when buying a home or condominium in the bustling metropolis of Vancouver.

One of these oft overlooked details is known as “Title Insurance.”

So, what is title insurance and why do you need it?

20 Jun

2013

Real GDP to increase to 1.9 per cent in 2013

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