Group items tagged

RBC, TD, Scotiabank and BMO are also trimming interest rates on Saturday for a number of other residential mortgage products, including various special offers.

This latest round of mortgage rate cuts was prompted by falling yields on government bonds across a range of terms, said TD spokeswoman Barbara Timmins in an e-mail.

For instance, the yield on the five-year Government of Canada benchmark bond was 2.33 per cent on Thursday, down from 2.58 per cent on May 2 (the first business day of the month), according to data on the Bank of Canada’s website.

Banks usually try to match maturities when they use bonds to finance consumer mortgages. As a result, a five-year government bond would be matched up with a five-year consumer mortgage.

From 2004 to 2008 Canada's mortgage debt was growing at a rate of 10 per cent per year, but eased off as a result of the recession and hit 7.6 per cent in the most recent 12 month period

The report paints a positive picture of Canada's mortgage market, saying Canadian homeowners are comfortable with their mortgage debt, have "significant equity" and could even handle an increase in their interest rate.

In terms of interest rates, the report found that the average rate is 4.22 per cent, down from 4.55 per cent a year earlier. Among those who have financed or renewed a mortgage in the past year, the rate is 3.75 per cent.

Accordin g to the survey, 84 per cent of Canadians could afford an increase of $300 per month or more.

About 6 per cent of homeowners would have trouble with an increase of less than 1 per cent of their interest rate payment, and a further 5 per cent would have trouble with an increase of between 1 and 1.49 per cent

record household debt levels have left this country vulnerable to economic shocks

the Canadian banks will report a slight increase in profit for the quarter as they contend with the impact of declining consumer borrowing, moderating capital markets activity and other headwinds.

  Please wait while we process your request   Please wait while we retrieve the user's information Bio Your bio is currently empty. Now is a great time to fill in your profile. This profile is private. This profile is only shared with friends. This profile is under review. We were unable to request friendship with this user. We were unable to request friendship with this user. Are you logged in? Your friendship request has been sent to this user. We were unable to terminate friendship with this user. We were unable to terminate friendship with this user. Are you logged in? You are no longer friends with this user. We were unable to ignore this user. We were unable to ignore this user. Are you logged in? This user is now ignored. We were unable to stop ignoring this user. We were unable to stop ignoring this user. Are you logged in? This user is no longer ignored. We encountered a problem recommending this user. pluck_user_recommend_permission You have recommended this user. Type Obscenity/VulgarityHate SpeechPersonal AttackAdvertising/SpamCopyright/PlagiarismOther Comment(optional) pluck_user_mp-abuse_too_long_err Send Cancel height: 3px; width: 1px; position: absolute; font-size: 1px; overflow: hidden; background-color: rgb(118, 117, 114); top: 0px; left: 3px; bac

With domestic household debt levels hovering close to where they were in the United States prior to the financial crisis, many observers are warning that Canadians need to start paying down debt if the economy is remain on level footing

Canadian consumers continue to pile on mortgage debt despite repeated warnings that they need to crank back on borrowing if this country is to avoid a painful real estate correction

anadian consumers continue to pile on mortgage debt despite repeated warnings that they need to crank back on borrowing if this country is to avoid a painful real estate correction

growth in the overall home loan market "is continuing to be more robust,"

Canada's fourth-largest lender on Wednesday kicked off second-quarter bank earnings season with a 7.5% increase in profit on the back of lower provisions for bad loans

The national average home price has been skewed upward in recent months due to a surge in sales of multi-million dollar properties in the Greater Vancouver area.

“Changes to mortgage regulations that took effect in April 2011 likely sidelined a number of first-time homebuyers,” said Gregory Klump, CREA’s chief economist.

“By contrast, higher end home sales in Greater Vancouver and Toronto had their best April ever.”

The drop in sales of previously occupied homes last month reflected changes to mortgage rules that came in midway through March that reduced the maximum amortization period and pulled forward some sales that would have otherwise occurred later in the year.

including Toronto, Vancouver and British Columbia’s Fraser Valley.

Government moves to tighten mortgage rules introduced last spring to reign in some buyers gave sales last year a boost, while a second round of changes introduced in March, ate into sales this April, CREA said.

“Last April, several transitory factors artificially boosted sales. This included the impending tightening of mortgage rules, speculation about higher interest rates and the looming introduction of the HST in some provinces,” said Klump.

sales were down 4.4. per cent from March of this year.

The number of newly listed homes edged up 1.3 per cent in April from March, but remained well below levels in January and February, when the coming mortgage rule changes were announced.

In the key Toronto market, housing affordability measures rose by 0.8 per cent for a 1,200 square foot detached bungalow in the first quarter.

It now takes 47.5 per cent of household income to service the cost of mortgage payments, property taxes and utilities.

The average price of a bungalow in Toronto was $486,900 and the qualifying income needed to purchase was $103,000. But that is light years away from the Vancouver market, where an average 1,200 square foot bungalow is $736,000 with a qualifying income needed of $136,900.

Affordability levels are expected to get worse as interest rates get higher this year, said RBC, warning that Vancouver may be “dangerously disconnected from prevailing local housing demand fundamentals.

“The risk of a sustained and widespread drop will be limited given our expectation of a positive economic context that will sustain growth in household income and a gradual pace of interest rate policy normalization,” said Hogue. In Ontario, the market looks to be on a “sustainable path” although it is likely to face headwinds in the coming months arising from interest rate increases and a tightening in mortgage regulations, said RBC.

In 2010, that savings rate has dropped to 4.2 percent — about $2,500 per household.

the recession has shaken out the labour market. “We’re experiencing a gain in jobs, but people are now in jobs that paid less than what they did.

Mortgages account for about two-thirds of the $100,879 owed by the average household, or about $63,126 per household, with 55 per cent holding mortgages and 45 per cent mortgage-free. The other third is consumer debt, which includes credit cards and personal loans.

“The debt-to-income ratio is concerning … but recently, (mortgage) credit demand has slowed and consumer credit demand has slowed considerably as well. It’s now at less than 5 per cent, which is half of what we saw in the previous five years on average.”

Personal debt consolidation and restructuring expert Jim Ferguson said the most common reason people are getting into overbearing debt is the ease of availability of credit

Canadian debt levels, relative to income, are still meaningfully below peak U.S. levels, but that a further sizable increase would be worrisome.

“Household financial assets are also growing fast due to the strong stock market, which dampen concerns about the debt, but assets can vanish more quickly than debts.”

Canadians are doing a better job of managing their credit card debt which was down $25 on a year over year basis to an average of $3,539 at the end of the first quarter

irst quarter data shows a continued increase in the total debt per consumer, although the trend still remains modest compared to the double digit, pre-recession levels

Lines of credit continue to drive debt and are the largest contributor after mortgages, accounting for 41% of the outstanding debt in Canada at the end of the first. Delinquency longer than 90 days were .21%

still at historic lows, moderate raises in mortgage rates will impact carrying costs negatively, thus slightly subduing housing demand

Average resale prices are expected to rise by a brisk 11.5 per cent to $340,000 this year, but the growth rate will slow significantly in 2012, to 2.9 per cent

that segment falling 20.1 per cent to 1,975 units

5,950 total housing starts forecast for 2011, up 2.3 per cent from the previous year

single-detached market is anticipated to be the hardest-hit

New home construction is also expected to cool down this year

result of an ongoing shift towards more affordable housing types

first-time homebuyers and downsizing empty-nesters at the forefront of Ottawa's housing market

raising the popularity of more affordable housing types such as condominium apartments, townhouses and semi-detached homes

soaring gas prices and lengthening commute times will push up interest in homes in the core

Elsewhere in the country

MLS sales, meanwhile, are expected to be between 429,500 and 480,000 units, with 2012 sales anticipated to be in the range of 410,000 to 511,900 units

slowdown affecting both single-detached homes and multi-family housing

Debt growth in Canada is slowing from the double-digit pace seen before the recession

And total borrowing, including mortgages, typically the biggest household loan, is slowing, major Canadian banks said recently in their quarterly reports.

The Bank of Canada’s trend-setting overnight lending rate is just 1 per cent. But with inflation running at 3.3 per cent, above the central bank’s ideal range, Carney is under pressure to start raising lending rates to dampen demand.

Total debt per consumer increased to $25,597 in the first three months of this year,

Among types of loans, TransUnion said credit card debt, usually the most expensive to carry, barely budged from a year ago, falling $25 to an average of $3,539.

In a sign some borrowers may already be struggling, the national credit card delinquency rate rose 11 per cent. The rate measures the ratio of consumers who take 90 days or more to pay their bill.

The average line of credit, the most popular loans for their low cost and high flexibility, rose 5.9 per cent to $33,762 compared to last year. However, total line of credit debt declined for the first time in five quarters.

One noticeable shift was the decreased use of lines of credit, Higgins said. The category is the largest among consumer loans, making up 41 per cent of the total, and even more in Ontario, at 57 per cent

The study found debt loads rose in all provinces, led by Quebec and Newfoundland and Labrador. British Columbians had the highest load at $36,649.

Lines of credit are the most popular form of consumer debt, excluding mortgages, accounting for more than 41 per cent of outstanding debt at the end of the first quarter. Debt on lines of credit stood at an average $33,981, up 5.9 per cent from $31,867 in the first quarter of 2010.

“If house prices are to fall, there needs to be a mechanism — an excess of supply relative to demand,”

Last year, the Canadian Real Estate Association modified its forecasts at least four times. After initially predicting housing prices would increase in 2011, it now says prices will fall by 1.3 per cent — far below the eye-catching 25 per cent forecast by Capital Economics.

Financial agencies such as the Canadian Mortgage Housing Corporation, which provides mortgage loan insurance, could also be exposed to significant losses

The Capital Economics forecast is not the first to predict a bubble in the Canadian market. Gluskin Sheff & Associates chief economist David Rosenberg has also predicted a 25 per cent drop in Canadian housing prices, as has The Economist magazine.

As in the U.S., financial innovation and very low interest rates have allowed Canadian consumers to take on more debt, and house prices are high relative to income

However, consumers have remained complacent because low rates are keeping mortgage payments low.

The historical home price-to-income ratio is 3.5, but now it's hovering around the 5.5 mark, meaning average house prices are more than five times the income of workers

still net borrowers, meaning they borrow more than they save

consumer spending will not be the engine of economic growth in the coming quarters and the inevitable future rebalancing of monetary policy will be a shock to many households

some of the drop in household indebtedness is explained by strong income gains, not by debt repayment per se

sustainable personal growth is likely in a range of 4.0-4.5 per cent. Credit continues to grow at a pace that is two percentage points above that

the level of Canadian household debt — which in December officially surpassed those of our neighbours to the south — is unsustainable

total consumer debt load is reported to be about $1.5 trillion

Data released late last year suggested Canadians owed on average $112,000 — a figure that includes all kinds of debt, including mortgages — and a debt-to-income ratio of 150 per cent means they were spending $1,500 for every $1,000 in take-home pay

Factors that will moderate credit growth over the short term include spending fatigue, a soft landing in the housing market, stricter mortgage rules and Canadians preparing for the higher interest rates that are sure to come as the economy recovers.

consumer debt rose in all provinces

the trend still remains modest compared to the double-digit, pre-recession levels

Average credit card debt

sign of troubled credit health, the national credit card delinquency rate — the ratio of credit card accounts that are 90 days or more overdue — grew 11 per cent from the first quarter of 2010.

average borrower debt on auto loans was also up in the quarter — by 12.4 per cent to $16,189 from $14,402 in the first quarter of 2010

Lines of credit are the most popular form of consumer debt

more than 41 per cent of outstanding debt at the end of the first quarter

consumers should take care to rein in their borrowing

consumer spending slowed during the first quarter, to just 0.1 per cent growth

consumers are focused on consolidating debt after borrowing heavily during the recession

higher energy and particularly gasoline prices are taking a bigger bite out of household budgets, leaving less for other forms of expenditures

high levels of indebtedness are expected to weigh down purchases going forward