International Monetary Fund Sees A Bubble In The 

Rob Wile | Jan. 17, 2012, 11:58 AM | 1,744 

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It may be time to short Canada.

A recent report published by the IMF examines the state of the Canadian housing market in a section titled “How Vulnerable is Canada’s Housing Market?”  Canadian real estate prices quickly bounced back from the 2008 dip.  But the IMF thinks they are due for a correction.

Their points:

• Real estate model indicates prices are overvalued at nearly 13 percent
• World Economic Outlook suggests a decline of 6 percent through 2015
• Price-to-income and price-to-rent ratios remain above historical averages
• Interest rates are very low, so any rate increase would put additional strains on already highly indebted households.

Doug Alexander and Sean Pasternak at BusinessWeek provides even more evidence. Low bond yields have caused lenders to drop mortgage rates to lure borrowers: three of the countries largest banks now offer financing at 2.99 percent.  From BusinessWeek:

“Investor-owned condo properties have got to be a cause for concern, just because of supply and demand,” Bank of Montreal Chief Executive Officer William Downe said Jan. 10 at a banking conference in Toronto. Royal Bank CEO Gordon Nixon said “there’s no question” that the condo markets in Vancouver and Toronto are the most vulnerable in the country.

Canadian home sales in 2011 increased 9.5 percent to C$166 billion, they reported, as home prices rose 7.2 percent.

Here’s a look at pricing from the Canadian Real Estate Association:

 

Read more: http://www.businessinsider.com/imf-sees-a-bubble-in-the-canadian-housing-market-2012-1#ixzz20n4SKzHZ

July 06, 2012

JUNE 21, 2012 – OSFI Announcement

At 8:15am this morning Mr Flaherty announced these changes that will impact insured mortgages. Changes (take effect July 9, 2012 so only a few short weeks away):

1                     Max Amortization down to 25 years not 30

2                     Refinance to 80% loan to value not 85% LTV

3                     GDS Max 39% and TDS 44% (not 44/44)

4                     No default insurance above $1mil

I’m always here to answer any of your questions, or to help you arrange suitable mortgage solutions!

Mail to: ddunkley@dominonlending.ca

The Bank of Canada left rates unchanged this morning for their 14th consecutive meeting although their message remained clearly tilted toward tightening at some point in the future.

As of May 9, 2012 – In light of the still-lofty debtloads, the signal emerging from the central bank in April that interest rates are likely to rise sooner than later will present a challenge to many households. In response, we, along with many other forecasters, have tinkered with our interest rate forecast. 

We now believe that the Bank of Canada will likely resume hiking interest rates this coming fall rather than in the winter. However, those increases are still likely to be very gradual. We feel that they will be limited to just 1 percentage point in increases over the next two years. With the U.S. Federal Reserve on hold likely until 2014, any hikes in excess of that by the Bank of Canada would put upward pressure on the Canadian dollar, dampen export growth, and weaken the economic recovery. However, once the U.S. economy gains more traction and interest rates head higher, the Bank of Canada will have more scope to raise the overnight rate further… 

FINANCIAL POST – The clock is about to strike midnight for mortgages rates that have been the best deal of the past half-century — at least as far as the major banks are concerned.

Bank of Montreal’s recent cut-rate 2.99% five-year fixed closed mortgage is set to expire March 28 and, not surprisingly, competitors have already signaled they are ready to raise rates in the wake of the sale ending.

Royal Bank of Canada and Toronto-Dominion Bank were the latest to do so, announcing they had ended their offer of a 2.99% rate on closed four-year mortgage. Bank of Nova Scotia had quietly been telling mortgage brokers last week that it had planned to do the same.

Critics complained the deal included restrictions like a 25-year amortization and limited prepayment privileges.

While the Banks are raising rates, smaller lenders like credit unions continue to offer five-year rates below that 3% threshold on five-year mortgage.

For the banks, it was inevitable that they would raise rates given rising governing bond yields, which are generally used to price mortgages.

It does look like the tide has turned on the bond market, which seems to be pushing nervous consumers to lock in rates. Bond yields have climbed about 50 basis points in the past two weeks on the five-year government of Canada bond.

As history is known to repeat itself, we’ve been cautioned that the bond market has been hard to predict in the past so we can’t rule out market conditions changing yet again.

It does seem like things have shifted – we’ve had a number of selloffs over the years in the bond market and the bull market has come running back with a vengeance so you never want to say never.

It’s still unclear what it will mean for the spring housing market, which could get a boost from low rates and early warm weather.

Historically when potential buyers get a whiff that things may be shifting on the interest rate landscape, it often pulls anybody on the fence off of the fence.

DON’T CHANCE THE MARKET OR BE DICTATED BY RATES. “IT’S NOT ALWAYS ABOUT RATE!” AFTERALL, DO YOU KNOW WHERE YOU WILL BE IN 5 OR 10 YEARS FROM NOW?   BEYOND OUR CONTROL, ON TOP OF RISING PRICES FOR OUR EVERYDAY STAPLES, SUCH AS GAS, HEAT, AND FOOD…WILL YOU BE ABLE TO AFFORD HIGHER INTEREST RATES WHEN IT’S TIME FOR YOU TO RENEW YOUR MORTGAGE?

DON’T WAIT! KEY WORDS TO CONSIDER ARE: BUDGET, BUDGET, AND BUDGET. I’m on your side ~ 289.271.2710 ~ www.denisedunkley.ca

WOW! This just in…3.89% – 10-yr fixed rate (best available rate special) 

To apply – contact me today 905.380.2241 www.denisedunkley.ca

As an Independent Licensed Mortgage Agent in Ontario for NATIONWIDE Dominion Lending (not tied to any one real estate firm), I have lender(s) available offering 2.99% fixed 5-yr term / 10-yr fixed rate BELOW 3.99% (no tricks! no broker fees *O.A.C. E & O.E.) As always with ANY lender, rates are subject to change without notice. For information, quick approval, or rate hold while you shop contact me direct at: ddunkley@dominionlending.ca or APPLY securely online www.denisedunkley.ca