Hello everyone and Happy "One Month Before Christmas"!!
Yes, we all have exactly one month to get ready. Isn't this great service? Not only do we remind you when to lock in...we remind you when to start your Christmas shopping. We hope that you have a wonderful holiday season getting together with friends and family.
We'd like to begin our newsletter by taking some time to thank all of our clients who work in health services. We realize how hard you have been working during this H1N1 crisis and appreciate your efforts out there on the front lines. Thank you.
News from the CAAMP Conference
We recently attended the CAAMP Conference in Toronto where thousands of mortgage professionals and lenders gathered to exchange information and attend workshops to keep up to date on trends in the industry and educate ourselves on new tools and opportunities available for us to assist you in creating your mortgage solutions.
It was a very exciting event and lots of fun meeting with the top executives on the 56th floor of the CIBC building overlooking the lights of Toronto. The following is the latest news from one of those top executives , economist Benjamin Tal.
Mr. Tal basically supported what we have been saying in our previous emails. That Prime will stay low well into the end of 2010. Below are some key quotes and observations that he shared with the crowd....
The Credit Crisis
- The TED spread - which is the key indicator of credit market liquidity - is back to a healthy 25 basis points, after hitting 500 last fall.
- " This recession is over...period...but we will pay heavily for what the U.S. Fed is doing." ( this means that interest rates will rise and deficits will drag on Canada's economy so we will have to be prudent and ready for rates to rise)
- There will be another rate of mortgage "resets" in the U.S. but there will be much less of a rate shock as the new rates will be closer to the teaser rates that the owners are paying now.
- Fewer of these loans are securitized than in the subprime crisis.
- Consumers will slow their spending AND borrowing.
- U.S. monetary policy is dictating Canadian policy.
- The Bank of Canada will have not choice but to raise rates until the U.S. does. Otherwise our dollar would rise and threaten Canada's export economy.
- Ben predicts that Canadian rates will not rise as much as in the U.S.
Real Estate
- In terms of real estate, Mr. Tal mentioned, " We should not be in a seller's market in the 9th inning of a recession" BUT there is no information indicating that there will be a real estate bubble.
- Expect a 2% to 3% increase in rates, starting no earlier than Q3 of 2010 and rates usually go up faster than they come down.
Canada Stronger than our Neighbours to the South
- duration of unemployment in Canada ( which is as important as unemployment rates) is much lower than in U.S.
- This means that Canadians can more easily find new jobs and continue to pay their mortgages.
- Canadians have three times more cash savings than Americans per capita and this cash is waiting to be redeployed.
- Income and consumer confidence is rising twice as fast in Canada as in the U.S. and it is all about consumer confidence
- Canada will outperform all other G7 countries in GDP growth in 2010.
All in all Mr. Tal's news was relatively positive for Canadians. We will continue to recommend the Variable Prime mortgages and keep a close eye on any shifts in rates. Continue to read your Variable Rate newsletters and pass them on to friends and family and we'll keep you posted on where things are going.
Prime rate is the same at 2.25%
Lock in Rates (lock in not recommended at this time for those at + .80% and over can contact the office to review advantages of dropping to Prime at the time)
3 yr 3.55%
4 yr 4.00%
5 yr 4.09%
Suzanne Boyce
