I just read this article in the Globe and Mail, you can read it here. If not here is my take. Current stats seem to indicate that we are slowly changing from a seller’s market to a buyer’s market. The change is sweeping us from West to East. As the market was at it’s hottest in the oil rich Alberta. This is nothing out of the ordinary in the cycle nature of real estate.
Cheers,
Pat
According to an article in the Globe and Mail this morning it says we are carrying too much debt in comparison to our assets. However don’t worry CIBC conomist Benjamin Tal said that it is because of the economy! So let me get this straight, we are spending more than we make, putting ourselves deeper in debt and it is not really our fault it is the economy. He is right about one thing, the economy is not as rosy as it was just few short years ago. That should not be an excuse to over do it! What people fail to realize is that we make this economy go round, and if we are forced to cut back our spending to keep up with our debt service needs, what will happen then?
The point that I am trying to make is this, we are responsible for our own situation. We are where we are because of the choices that we have made, good or bad. Some thing that I have just read recently sums this all up ” We are not our circumstances, our circumstances are us! When we change, then our circumstances change”. If we want things to change, then we must first change!
Cheers,
Pat
As taken from the Globe & Mail. See my comments below.
The stock market would have you believe that the worst of the financial mess is over, and that it’s time again to buy, buy, buy. But Barry Ritholtz, who writes The Big Picture Blog, thinks the buying frenzy of the past week is a head fake that will end badly.
“The anticipated bear market bounce in financials has led to the usual fools’ chorus that the worst is behind us, the economy is on the mend, and a recession is avoided,” he said. “How’s the economy doing? You tell me.”
He then goes on to list (and it’s a long list) the problems that continue to plague the U.S. economy. For one, General Motors Corp. and Ford Motor Co. are suffering, but so is mighty Toyota Motor Corp., a sign that this isn’t an isolated slowdown affecting a couple of troubled names.
The nay-sayers are at it again. So there is no time better than the present to take control of you finances. The so called professional’s are not doing so hot at it. This is what I mean by that comment, I want you to take control of your finances so that the banks, credit card companies or any one you may owe money to is not in control over you. So that when the economy tanks, and no one is giving out credit any more ( well they are, but they are making it harder to get) and people still need it. I want you to be in a position where you can fund you own life style. Where you will not have to go hat in hand to the local bank or broker so you can rob Peter to pay Paul. Please contact my office so we can show you how to take back control and get back in the driver’s seat toward your own financial freedom.
Cheers,
Pat
I just finished reading this on the Globe and Mail site. I am putting it here because I do not agree with it. Please feel free to send me your comments.
Thanks
Pat
LORI MCLEOD AND KEVIN CARMICHAEL
From Thursday’s Globe and Mail
July 9, 2008 at 8:16 PM EDT
OTTAWA — The federal government is cracking down on the mortgage industry in a move that could help protect against a U.S.-style housing bubble, but will also make it tougher to borrow money to buy a home.
The Finance Department said Wednesday it will stop backing mortgages with amortization periods longer than 35 years as of Oct. 15.
It will also start demanding a down payment equal to at least 5 per cent of the home’s value, rather than guaranteeing mortgages where they buyer has borrowed the total amount.
“Today’s announcement marks a responsible and measured approach by the government to ensure Canada’s housing market remains strong, and to reduce the risk of a U.S.-style housing bubble developing in Canada,” the Finance Department said in a statement.
Existing 40-year mortgages will be grandfathered, a Finance Department spokesman said.
In 2006, the maximum amortization period was extended to 40 years from 25, and longer-term mortgage products have become increasingly popular with buyers looking for lower monthly payments as the price of Canadian homes soared.
Last year, 37 per cent of new mortgages were for terms of longer than 25 years, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP).
But while longer amortizations stretch out monthly payments, they also greatly increase the cost of a mortgage over its lifetime.
For example, the total interest on a $300,000 mortgage can soar from $286,161 over the life of a 25-year mortgage to $498,416 over a 40-year amortization period – adding more than $200,000 to the cost of the home.
This, combined with the fact that these mortgages are often combined with little or no equity, raised alarm bells with policy makers looking at the turmoil that took place in the U.S. when house prices started to fall.
“We’ve seen an inclination now, a trend, toward longer-term amortizations and smaller down payments, and that is a matter of some concern,” Finance Minister Jim Flaherty said in a speech in May. Mr. Flaherty was not available for comment Wednesday.
Jim Murphy, president and chief executive of CAAMP, said in talks with him the government expressed concern about the risky lending products that collapsed the U.S. housing market.
The Finance Department was also worried about the future impact of competition between mortgage insurers, which led to the introduction of 40-year mortgage in 2006, Mr. Murphy said.
“I think you have a clear case of the government sitting down and looking at its risk exposure and wanting to review that. They have financial guarantees in place for the CMHC and private insurers, and they were saying, ‘What is our risk, and what is the risk to the Canadian taxpayer?’ ” he said.
Reaction from the industry was mixed.
“CMHC supports the new parameters … . We also support their efforts to maintain the strong Canadian housing market,” said spokesperson Stephanie Rubec, adding CMHC will stop insuring 40-year and zero down payment mortgages in October.
“It’s the right move,” said Nick Kyprianou, president of Home Capital Group Inc., whose principal subsidiary, Home Trust Co., provides alternative mortgages. “Why get people overextended? Nobody wins by getting people right to the end of the cliff.”
Others, however, say home buyers and banks have been prudent with their finances, and are being punished for the more lax approach south of the border.
“Things here are not like they are in the U.S. where they had those NINJA loans, no income, no job, no assets. … It’s only going to hurt the consumer,” said John Panagakos, owner of Toronto brokerage Mortgage Centre.
The move actually comes at a time when the housing market has moved on to other concerns, the most pressing of which is chilling consumer sentiment due to high fuel prices, said Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc.
“It’s a bit like closing the barn door after the horse has already run down the road.”
Pat Sawler
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