The Bank maintained its forecast that stronger growth will likely be reported for the final quarter of 2009, after a disappointing third-quarter performance, with the economy forecasted to build momentum throughout 2010. Most experts maintain that 2010 will see stronger growth including an improved employment outlook, increase in investment in machinery and equipment, and large gains in the leading indicators index.

However, the strengthening in the Canadian dollar and weak  U.S. demand may cause a slight risk to Canada’s recovery. Last week’s reiteration that overall risks are “tilted slightly to the downside” as a result of policy operating at the lower bound indicates that the bank’s policy plan remains intact and it is unlikely that there will be a change in the overnight rate before the end of the second quarter of this year. However, this cannot be written in stone.  Huge employment gains and strong 2009 fourth quarter numbers could change the timing of the rate increase.

Many forecasters are still expecting Canada’s economy to gain strength; perhaps though, more slowly than earlier recoveries.  This may in turn likely delay raising the overnight rate until the summer of 2010.

There are a couple of ways to do this effectively.  First, commit to the lowest amortization period you can while still being able to make the payments and qualify for the mortgage amount you require. The lower your amortization period is (25 years versus 35 years), the higher your payments, but the less you will pay in interest over the life of your mortgage.

Secondly, you can accelerate your monthly mortgage payments into bi-weekly or weekly payments, thus paying down your mortgage with less interest.  For accelerated bi-weekly payments, you make a payment every two weeks (monthly payment divided by two) but because there are 52 weeks in the year, you end up making an extra 2 payments in the year.

Of course, accelerated payments don’t necessarily do anything for erasing debt unless there is a change in spending habits made. By rolling your debt into your mortgage (by refinancing) allows you to pay lower interest rate on your debt (no 18% credit card debt), but doesn’t stop you from re-accumulating that debt by continuing to overspend.

There are a couple of main points that have to be looked at when first inquiring as to whether you can use your mortgage to help your credit crunch.  First, what is the penalty to break your current mortgage and refinance your debts into your mortgage.  Typically lenders charge a penalty to break a current closed mortgage; however call your lender and inquire.  They may allow you to increase the amount of your mortgage, free of penalty as long as you stay with your current lender.  If switching lenders, it is important to weigh the costs and benefits to paying the penalty.

The second point is whether you have an adequate amount of equity in your home to draw out and pay your other debts.  This will be assessed by an appraisal of your current home versus the mortgage amount you will need to pay-out your current debts.

If you find yourself looking at high-interest credit charges, rolling your debt into your mortgage and taking advantage of the low mortgage rates may just be the leg up that you need!  Talk to your mortgage advisor for more information!

These unsteady changes in the job statistics are signaling more of a roller coaster recovery than was expected and are causing economists to scale back their predictions in rate hikes. The job loss numbers for December are mirroring the recovery of the recession of the 1990’s which saw large job growth, followed by consolidation.

Despite this hiccup, Economists estimate growth in Canada in the final three months of 2009 to register between 3% and 4%.  Many Economists are still looking to the third quarter for the Bank of Canada to raise its benchmark lending rate; however, this remains to be seen.

For contracts written before November 18th, 2009 5% GST will be charged regardless of when completion is.

For contracts written after November 18th, 2009 that complete before July 1st, 2010, 5% GST will be applied.

For contracts written after November 18th, 2009 that complete after July 1st, 2010, 12% HST will be applied.

Although HST is a combined tax of 5% GST and 7% PST, there are still rebates available for both taxes.
For example:

On a $300,000 Purchase Price
15,000 GST Charged (5%)
21,000 PST Charged (7%)
$336,000 TOTAL

(5,400) GST Rebate
(15,000) PST Rebate
($20,400) TOTAL REBATE

Net Purchase Price with Tax:
$336,000 Total with Tax
($20,400) Total Rebates
$315,600 TOTAL DUE with HST

This new total reflects a 2% increase over what would be paid with GST.

As with GST rebates in the past, there is a maximum HST rebate on the PST portion of $26,200.

Please consult with your Realtor and Mortgage Broker as to the specifics of your situation and how best to prepare yourself for the increase in tax payable on new home purchases in British Columbia beginning on July 1, 2010.

It is our hope at Silverman Mortgage Group that everyone enjoyed a great holiday season and you are all ready for an amazing 2010!

We are starting the new year off with historically low interest rates. This being said, with the loonie rising to the highest level since October and the spread between today’s low interest rates and the bond yields, rates will be trending upwards in the near future.

If you or anyone you know are in the market to purchase a new home, refinance your current mortgage, renew your current mortgage or pull some equity from your current home now is the time!!

If you are actively in the market, get your pre approval’s in ASAP as you can hold today’s rates for up to 180 days.

Click on the rate  link to see today’s rates.

For a close friend of more than 40 years, Christmas is coming Oct. 1.

That’s when, a day before his 65th birthday, he retires after 49 years of working life, most of it spent in journalism.

“I’m like a kid looking forward to Christmas,” he says. “In fact, this will be better than Christmas.”

His will be a good retirement, with seven different pensions adding up nicely to ease the way in what should be his golden years. (He will have the OAS, CPP, a small British government pension and four modest defined-benefit pensions from various employers over the years.)

He will do some travelling with his wife, who has already retired, spending two weeks in the south of France, a place they adore, to start his retirement with a Gallic flourish. But he will be toweringly unambitious in retirement, spending much time listening to opera, reading crime fiction and histories, cooking, having a few beers, looking after his five cats and looking out the window — when he has the time.

And yet, if the right opportunity presented itself, he just might think about working a day or two a week for some extra spending money. It would have to be tailored precisely to his needs and wants.

But for many people of my friend’s vintage and a bit younger, Baby Boomers who have been blindsided by the Great Recession, coming out of retirement or working deeper into tarnished golden years are not options, but necessities.

The problem is that the Great Recession has pushed unemployment to decades-high levels, so jobs are simply not there for the taking, as my friend will no doubt discover if he some day summons up the energy to go looking.

A U.S. study published last week by financial retirement firm Longevity Alliance shows that almost half of American retirees have thought about getting a job, but now is simply not the right time. Though circumstances are somewhat different in the United States for retirees, we can roughly conclude that the numbers and sentiment in Canada will be similar.

Among other things, the study found that:

* Among retirees, 43% “seriously considered the possibility of some day going back to work” when they first retired.

* Only 16% of retirees say they are currently considering leaving retirement.

* “Changes in personal finance” is a major consideration that would force a retiree to think about going back to work, with 42% of retirees citing it as a factor.

Though some economists and authorities have declared the recession over (prematurely, in my view) the recovery, when it comes, is likely to be of the “jobless” variety in the United States, Canada and much of the rest of the world.

It is reckoned that 15 million U.S. jobs will have to be created to get the country back to employment levels that match those before the recession and also to make up for the subsequent rise in population. For Canada, the number is likely to be more than one million jobs.

As a result, my friend, if he chooses, and millions of other retirees should not expect to have jobs thrust at them any time soon, even if they are skilled and reliable workers.

The answer, then, to finding a comfort level in retirement for many people is saving solidly for retirement and probably cutting back on some things in retirement.

As Longevity Alliance notes: “Retirees are very cautious right now, but not panicked. Their reluctance to rejoin the workforce only underscores the need for them to plan very carefully for the rest of their retirement.”

Amen to that. As I’ve noted over the past few years, another thing retirees can do is reinforce the themes of saving and planning to their children and grandchildren. If they work hard and save hard, but not to the exclusion of enjoying life, they will more likely be able to enjoy a good, long life.

They will almost certainly not have seven different pension sources like my friend, who also has a decent-sized RRSP that was not invested in stocks at the time of the crash. But they can work toward making their personal savings and investments add up to their own defined-benefit plans.

So they, like my friend, will be able to look forward to their own personal Christmases, to retirements that may include work, but not the necessity of work. whanley@nationalpost.com

August 17th – Canadian 5 yr bond yields -.03bps to 2.58. The spread, based on 5 yr rate of 4.29% is 1.71.

August 13th – Canadian 5 yr bond yields -.05bps to 2.61. The spread, based on 5 yr rate of 4.29% is 1.68.

What does this mean?  Essentially, the yield, or rate of return on a bond, can be read through a yield curve: a pattern of yields on bonds.  The increase in bond yields is what experts watch.  If the bond yield continues to increase, the spread will continue to shrink and this could be a trigger for interest rates to rise.  Typically, lenders are looking for a new spread between 1.80 and 2.00.

]]> http://themortgageblog.ca/2009/08/canadian-bond-yields-may-signify-an-increase-in-interest-rates/feed/ 0 http://themortgageblog.ca/2009/08/tax-credits-101-starting-out/ http://themortgageblog.ca/2009/08/tax-credits-101-starting-out/#comments Wed, 12 Aug 2009 15:20:07 +0000 Mike Morisset http://themortgageblog.ca/?p=387 Reprint from Langley Times Wednesday August 12, 2009 B6

There is still a lot of confusion around the eligibility for the Federal Home Renovation Tax Credit.  At this time, the credit has not been legislated in the Income Tax Act, nor has draft legislation been released, but  some information is available on the Federal website.  A recap of eligible and ineligible expenses are listed below.

Canadian Homeowners can claim a 15% non-refundable tax credit for the eligible expenditures exceeding $1000, but not more than $10,000 which works out to a maximum credit of $1,350 which can be claimed on 2009 tax returns.

ELIGIBLE EXPENSES:

• Windows/Doors
• Flooring
• Furnace, boiler, woodstove, fireplace, water heater, oil tank
• Ventilation systems
• Central Air
• Reverse osmosis systems
• septic system
• well upgrades
• electrical wiring
• security systems
• solar systems
• painting
• building of additions, sheds, garages, decks
• roofing
• driveway resurfacing
• exterior shutters/awnings
• permanent installation of pools or hot tubs
• pool resurfacing
• solar heaters/heat pumps for pools
• landscaping – sod, perennials, trees, rock, lighting, water features, retaining walls
• interior fixtures – blinds, shades, shutters, lighting, fans
• kitchen, bathroom, basement renovation
• labor expenses for all of the above

INELIGIBLE EXPENSES

• furniture, appliances, AV
• tools
• cleaning/maintenance
• maintenance contracts
• financing costs

In order to be eligible for the tax credit, the work must be completed between January 27th, 2009 and February 1, 2010 and claimed on your 2009 tax return.  For more information visit the CRA website at http://www.cra-arc.gc.ca